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New Stimulus Hopes Fade While Economic Risks Grow

Here is the situation the U.S. economy faces, a month before Election Day: Job growth is stalling. Layoffs are mounting. And no more help is coming, at least not right away.

American households and businesses have gone two months without the enhanced unemployment benefits, low-interest loans and other programs that helped prop up the economy in the spring. And now, after President Trump’s announcement Tuesday that he was cutting off stimulus negotiations until after the election, the wait will go on at least another month — and very likely until the next presidential term starts in 2021.

It could be a dangerous delay.

Already, many furloughs are turning into permanent job losses, and major companies like Disney and Allstate are initiating new rounds of layoffs. The hotel industry is warning of thousands of closures, and tens of thousands of small businesses are weighing whether to close up shop for good. An estimated one of every seven small businesses in the United States had shut down permanently by the end of August — 850,000 in all — according to data from Womply, a marketing platform. The deeper those wounds, the longer the economy will take to heal.

Economists say lawmakers should be acting immediately to send more money to workers marooned on unemployment by the recession, to businesses of all sizes that are struggling to survive until the pandemic abates and their customers return in full force, and to state and local governments that have seen tax revenues decline and are already moving to lay off public employees.

While they disagree about exactly how much federal aid the economy needs right now, virtually all economists, across the ideological spectrum, agree on one thing: The correct dollar figure is not “zero.” Most estimates fall in a range between $1 trillion and $2 trillion.

Mr. Trump appeared to open the door to piecemeal measures like aid for airlines and individual checks, and his Treasury Secretary, Steven Mnuchin, and House Speaker Nancy Pelosi spoke twice on Wednesday about a stand-alone bill for airline relief. But prospects for even a limited package were uncertain and would fall far short of the amount that many economists say is needed to keep businesses and households solvent.

“The risk to waiting is that we may find ourselves in a place where we’re unable to turn back, we’ll hit a tipping point,” said Karen Dynan, a Harvard economist and Treasury Department official during the Obama administration.

R. Glenn Hubbard, a Columbia University economist who was chairman of the White House Council of Economic Advisers under President George W. Bush, said the economy still needed $1 trillion in immediate aid for people, businesses and state governments. “Failing to act will have real economic consequences,” he said.

Jerome H. Powell, the Federal Reserve chair, echoed those concerns in a speech on Tuesday, arguing that the government should go big and that not providing adequate support carried risks for the economy.

“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” he said. “Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy and holding back wage growth.”

Business leaders have made urgent pleas for help, arguing that the risk of not acting could doom entire sectors. The Business Roundtable, a group of chief executives from major corporations like Apple and Walmart, warned on Tuesday evening that “communities across the country are on the precipice of a downward spiral and facing irreparable damage.”

Some 36,000 franchise businesses are likely to close by winter without additional federal support, said Matthew Haller, senior vice president for government relations and public affairs at the International Franchise Association in Washington, which represents owners of gyms, salons and other chains. “The situation’s pretty dire,” he said.

Laid-off workers are also under pressure. Ernie Tedeschi, an economist at Evercore ISI, estimates that unemployed Americans will begin to exhaust the savings they were able to amass from previous rounds of aid as early as this month, leaving them struggling to buy food or pay rent. Without another aid package, the economy will regain four million fewer jobs through the end of next year than it would have if lawmakers had struck a deal, he said in a research note on Wednesday.

The gridlock in Washington is a reversal from the spring, when fear of an imminent economic collapse led Congress to vote overwhelmingly to approve trillions of dollars in aid to households and businesses. The effort was largely successful: Households began spending again, companies began bringing back workers, and a predicted tidal wave of evictions and foreclosures mostly failed to materialize. The unemployment rate, which reached nearly 15 percent in April, fell to 7.9 percent in September.

But most of the aid programs expired over the summer, and in recent weeks economic gains have faltered. Economists say the loss of momentum is likely to grow worse if more aid doesn’t arrive soon. Federal Reserve officials had been expecting another aid package to arrive when they released their economic projections in September, minutes released on Wednesday showed, and warned that “absent a new package, growth could decelerate at a faster-than-expected pace in the fourth quarter.”

While Republicans, Democrats and the White House have sparred over the scope and size of another package, many economists say the amount is less important than how fast and where the money is deployed.

“When do you need money? The answer is, two months ago,” said Jason Furman, who ran the White House Council of Economic Advisers under President Barack Obama.

Credit…Joseph Rushmore for The New York Times

Unemployment benefits are a top priority for many economists. The $600 a week in extra benefits that kept many households afloat in the spring expired at the end of July, leaving millions of families struggling to get by on only their regular state unemployment benefits, which often total just a few hundred dollars a week. Millions more people are depending on temporary programs that extend aid to those who don’t qualify for regular state benefits or whose benefits have expired. Those programs lapse at the end of the year.

Research has found that unemployment benefits are among the most effective forms of economic stimulus, because jobless workers are likely to spend the money rather than save it. But many economists said that is a secondary reason for extending benefits; the primary reason is to keep families from slipping into poverty or losing their homes.

“My principal reason for wanting the $600 to continue is not as a macroeconomist, it’s because I’m worried about people,” said Jay Shambaugh, a George Washington University economist who served as an adviser to Mr. Obama. “I think we can afford it and not have people starve.”

Senate Republicans have made clear they will not support restoring the full $600 supplement, which many of them opposed from the start. But even progressive economists say any amount is better than nothing.

“I don’t think it’s worth dying on the hill of ‘should it be $600 or $400,’” said Claudia Sahm, a former Federal Reserve economist who has been one of the most vocal proponents for federal spending since the start of the pandemic.

The consequences of failing to provide help to jobless families would be particularly dire for low-income families, many of them Black and Hispanic. Those workers were among the last to make gains after the previous recession, and have lost the most this time around.

“The gains that have been built up over time are fragile,” said Raghuram G. Rajan, a former chief economist of the International Monetary Fund who is now a professor at the University of Chicago. “You have a whole bunch of people who’ve struggled their way into a semblance of normalcy by 2019, and then you have this massive crisis. If we don’t try to protect those gains, it will take a longer time, a really long time to come back.”

Businesses are also in need of more help, particularly industries that have yet to return to full capacity as the virus persists. Major airlines began laying off workers this month after Congress failed to extend an earlier aid package. A hospitality-industry lobbying group last month released a report estimating that 1.6 million hotel workers could lose their jobs and 38,000 hotels could close without federal help. Restaurants are in similarly dire straits, especially as colder weather begins to shut down outdoor dining in much of the country.

With the pandemic lingering longer than many had expected, economists said businesses are facing new challenges that will require a different approach from what Congress previously funded. For instance, any new program probably needs to provide more flexibility to businesses, allowing them to make adjustments — including laying off workers — to survive a crisis that could stretch on another year or more.

Steven Hamilton, a George Washington University economist, said lawmakers should “radically expand” a tax credit that offsets the costs of retaining employees, along with additional aid for fixed costs like rent. He said any delay in help, especially until next year, “would be catastrophic.”

“It is much faster to close a business than to start one,” he said. “It took us a decade to regain the businesses lost in just three years during the Great Recession. The labor market seems to have hit a ceiling in recent months, and a big part of that is that many workers’ former employers no longer exist.”

And while companies have begun to bring back furloughed workers, the U.S. economy lost 216,000 government jobs in September, according to the Labor Department, with most of those cuts coming at the state and local level. Forecasters warn that much deeper cuts are coming as state and local governments reel from lost tax revenue.

Economists say that the failure to help state and local governments was one of the biggest policy mistakes of the last recession. Back then, state and local governments cut thousands of jobs, slashed spending and raised taxes, offsetting federal efforts to prop up the economy through deficit spending and tax cuts.

Economists have been arguing since the spring that insufficient aid for state and local governments was a significant flaw in the various relief packages.

“We’re in for a sizable reduction in economic activity coming from state governments if we don’t do anything,” said Wendy Edelberg, who runs the Hamilton Project, an economic-policy arm of the Brookings Institution. “It’s just a terrible thought that we didn’t learn that lesson post-2008, that state budgets are incredibly important to the aggregate economy.”

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Jerome Powell, Fed Chair, Says Economy Has ‘a Long Way to Go’ as Trump Calls Off Stimulus Talks

WASHINGTON — Hours after the Federal Reserve chair, Jerome H. Powell, warned that the economy could see “tragic” results without robust government support, President Trump abruptly cut off stimulus talks, sending the stock market sliding and delivering a final blow to any chance of getting additional pandemic aid to struggling Americans before the election.

Mr. Trump, in his first full day back at the White House after being hospitalized with Covid-19, said in a series of conflicting messages on Twitter that the economy was “doing very well” and “coming back in record numbers,” suggesting that no additional help was needed. But he also tweeted that “immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.”

The prospects for enacting another trillion-dollar package before the election had already been dim. But Mr. Trump’s directive carried heavy stakes both for himself and for members of his party, making clear that it was the president himself who was unwilling to continue seeking an agreement. Some Republicans rushed to condemn the move, as they prepared to face voters in less than a month.

Markets fell as the reality sank in that the economic recovery, which is slowing, would not get another jolt anytime soon. The S&P 500, which had begun to climb before Mr. Trump’s announcement, slid more than 1 percent soon afterward, and ended the day 1.4 percent lower.

The president’s political calculation in calling off talks while negotiations were underway — and while financial markets were open — remained unclear, though Mr. Trump said he wanted the Senate to focus on Judge Amy Coney Barrett’s confirmation to the Supreme Court.

His tweets came less than an hour before his Treasury secretary, Steven Mnuchin, and Speaker Nancy Pelosi were to resume talks on the phone aimed at hammering out a compromise. Instead, when they did speak, Mr. Mnuchin confirmed that Mr. Trump had withdrawn from the negotiations, and Ms. Pelosi, according to a spokesman, “expressed her disappointment.”

In a letter to her caucus on Tuesday, Ms. Pelosi called Mr. Trump’s decision to pull the plug on the talks “an act of desperation.”

“Today, once again, President Trump showed his true colors: putting himself first at the expense of the country, with the full complicity of the G.O.P. members of Congress,” Ms. Pelosi wrote.

Republican leaders said the president’s move was merely a bow to reality. Senator Mitch McConnell, Republican of Kentucky and the majority leader, told reporters on Capitol Hill that Mr. Trump’s view of the talks “was that they were not going to produce a result, and we need to concentrate on what’s achievable.”

In deciding to forgo any more immediate relief, the president could be setting the economy up for the type of painful outcome that Mr. Powell warned of on Tuesday. The Fed chair, who has increasingly called for more government help, said policymakers should err on the side of injecting too much money into the economy rather than too little given how much work remains.

“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Mr. Powell said in remarks before the National Association for Business Economics.

“Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy and holding back wage growth,” he said. “By contrast, the risks of overdoing it seem, for now, to be smaller.”

In multiple tweets later Tuesday night, Mr. Trump appeared to backtrack his assertion that an agreement would wait until after Nov. 3, at one point urging both chambers to “IMMEDIATELY Approve” reviving a lapsed loan program for small businesses, funds to prevent airlines from furloughing or laying off workers and another round of stimulus checks. It remained unclear if his tweets, which came after stocks plummeted, reflected a willingness to restart negotiations with Ms. Pelosi. Both provisions have bipartisan support, but several lawmakers have pushed for them to be included in a broader package.

Nearly seven months into the pandemic, millions of Americans remain unemployed as the coronavirus keeps many service industries operating below capacity. The unemployment rate has fallen more rapidly than many economists expected, dropping to 7.9 percent in September, and consumer spending is holding up. But the economy’s resilience owes substantially to strong government assistance that has been provided to households and businesses.

That included direct payments to families, forgivable loans to small businesses and an extra $600 per week in unemployment benefits, which Mr. Powell said had “muted the normal recessionary dynamics that occur in a downturn,” like lower consumer spending that leads to additional layoffs.

But that assistance has since run dry, putting what Mr. Powell called an “incomplete recovery” at risk at a time when he said additional help was likely to be needed. “There is still a long way to go,” he said regarding the labor market, adding that “many will undergo extended periods of unemployment.”

Economists said Mr. Trump’s decision could set back the recovery by ensuring that millions of unemployed Americans and thousands of struggling small businesses are forced to go months without additional help from the federal government. That could produce a spiral in which weak demand hurts businesses and leads to bankruptcies and foreclosures, prompting more layoffs.

“You are pulling the rug out from underneath this economy at a point where we’re still in the infant stages of this recovery,” said Ryan Sweet, a senior director of economic research at Moody’s Analytics.

Mr. Powell’s comments were a clear signal that the Fed remained worried about the economy’s ability to continue its rebound without more government spending. One big risk, he noted, was that prolonged economic weakness could perpetuate job losses that have weighed most heavily on women, people of color and low-wage workers.

“A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy,” he said. “That would be tragic, especially in light of our country’s progress on these issues in the years leading up to the pandemic.”

Ernie Tedeschi, a policy economist at Evercore ISI, said that while Mr. Powell had made similar statements in the past, “this was more urgent.”

“I get the sense that he is getting worried that if we don’t have another fiscal package, that the recovery we’ve had may be in jeopardy,” Mr. Tedeschi said.

Negotiators had resumed talks in recent days, but they were still far from an agreement, reflecting months of political incentives that pushed all sides away from a deal. Ms. Pelosi and Mr. Mnuchin again engaged in hourlong phone calls and were exchanging documents and paperwork in an effort to reach an agreement. But a number of critical issues remained, including how much aid to provide to state and local governments, extra unemployment benefits and the overall size of the package.

The failure to reach a deal had already infuriated rank-and-file lawmakers, who were largely excluded from talks and faced with the prospect of going home to campaign without the promise of relief. Mr. Trump’s decision to withdraw from negotiations prompted immediate, bipartisan backlash.

“Waiting until after the election to reach an agreement on the next Covid-19 relief package is a huge mistake,” Senator Susan Collins of Maine, who is facing her toughest re-election bid, said in a statement.

“I disagree with the President,” Representative John Katko, a moderate Republican from New York, said on Twitter. “With lives at stake, we cannot afford to stop negotiations on a relief package.”

Representative Elissa Slotkin of Michigan, a moderate Democrat who joined a bipartisan group of lawmakers in pushing for an agreement, said in a statement that “I cannot understand why the president would halt negotiations until after the election except in a cynical move to secure votes.”

“Doing so does not serve the needs of the Michigan families and our small businesses,” she added. “It places himself above the needs of the country, and it’s out of step with the mission of government, which is to help in moments of crisis.”

Republicans had argued that Ms. Pelosi, who pushed a $3.4 trillion package through the House in May and then muscled through a $2.2 trillion package last week, had pushed for unrelated “poison pills” that she knew Republicans could not support. But it was never clear that Republicans would have supported any deal. In recent days, as Mr. Mnuchin proposed a $1.6 trillion plan, lawmakers and aides in the Senate warned that a majority of Republicans would not support such a large price tag.

Top Trump administration officials have played down the need for another big fiscal package by pointing to the falling unemployment rate as a sign that the economy is experiencing a rapid rebound. And many Republican lawmakers have begun publicly fretting about the ballooning federal deficit, which is expected to top $3 trillion this year.

The Fed chair did not weigh in on what type or amount of aid was appropriate. But Mr. Powell, who has a long track record of worrying about the federal debt, has tried to convince lawmakers that “this is not the time to give priority to those concerns.”

Instead, he has reiterated time and again the importance of returning the economy to full strength, and that both the Fed and Congress need to continue to provide help.

“This will be the work of all of government,” Mr. Powell said. “The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods.”

The Fed itself has gone to great lengths to support the economy, cutting interest rates to near-zero in March, rolling out a large bond-buying program and setting up emergency lending efforts, many of them backed by Treasury Department funding.

While the Fed invoked its emergency powers in the 2008 recession, it has gone even further this time, buying municipal debt and corporate bonds to shore up key markets.

But Mr. Powell, along with many of his Fed colleagues, have made clear that monetary and fiscal policy can do only so much to buttress the economy and that the recovery will be determined in large part by the path of the virus.

Mr. Powell, whose institution is set up to operate independently of the White House, was unambiguous in recommending a solution, one that contrasts with the message and example that have at times been held out by the Trump administration.

He said the Fed should continue doing what it can “to manage downside risks to the outlook,” adding that doing so required “following medical experts’ guidance, including using masks and social-distancing measures.”

Nicholas Fandos and Luke Broadwater contributed reporting.

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Workers Face Permanent Job Losses as the Virus Persists

The United States economy is facing a tidal wave of long-term unemployment as millions of people who lost jobs early in the pandemic remain out of work six months later and job losses increasingly turn permanent.

The Labor Department said on Friday that 2.4 million people had been out of work for 27 weeks or more, the threshold it uses to define long-term joblessness. An even bigger surge is on the way: Nearly five million people are approaching long-term joblessness over the next two months. The same report showed that even as temporary layoffs were on the decline, permanent job losses were rising sharply.

Those two problems — rising long-term unemployment and permanent job losses — are separate but intertwined and, together, could foreshadow a period of prolonged economic damage and financial pain for American families.

Companies that are limping along below capacity this far into the crisis may be increasingly unlikely to ever recall their employees. History also suggests the longer that people are out of work, the harder it is for them to get back into a job.

To be sure, the labor market has bounced back more quickly than most forecasters expected in the spring. The unemployment rate dropped to 7.9 percent in September from 14.7 percent in April. But progress has slowed, and there are signs of more lasting damage. Through September, the economy had regained only about half of the 22 million jobs it lost between February and April.

High-interaction businesses like restaurants, theaters, casinos, conferences and cruises are struggling to fully reopen as the coronavirus continues to spread, leaving many workers out of jobs.

Credit…Eve Edelheit for The New York Times

Disney announced this past week that it would lay off 28,000 U.S. employees as its theme parks struggle. Layoff notices filed with state authorities show that hospitality and service companies across the country, from P.F. Chang’s restaurant branches to Gap stores, are making thousands of long-term staff reductions. Airport bookstores in Pennsylvania and Tennessee are cutting jobs as travel dwindles. So are wineries and upscale sports clubs in California.

Airline job cuts run to the tens of thousands. American Airlines started to send furlough notices to 19,000 workers and United Airlines to 13,000 after a federal moratorium expired on Thursday. Those are on top of reductions at other carriers, and existing firings across the industry.

Altogether, nearly 3.8 million people had lost their jobs permanently in September, according to the Labor Department’s latest monthly survey, almost twice as many as at the height of the pandemic job losses, in April.

As a result, the employment rebound, which was initially rapid, may begin to feel more like the grinding healing process that dragged on for a full decade after the Great Recession, economists warned.

“The risk is that you end up with people permanently detached from the labor market, and either you never get them back in or it takes you 10 years to get them back in, like it did the last time,” said Ian Shepherdson, chief economist of Pantheon Macroeconomics. “The economic consequences are that you depress future growth.”

The slow recovery from the Great Recession, when the tally of the long-term unemployed neared seven million, made it clear that extended spells out of work can haunt workers, locking them out of job opportunities or reducing pay.

Whether that penalty holds true in the pandemic-induced downturn remains unclear, but the economic repercussions of having a large number of workers sidelined will undoubtedly weigh on the United States’ economic potential and disrupt lives.

Jerome H. Powell, the Federal Reserve chair, has warned that a “significant group” of people may “still be struggling to find jobs” even as the labor market strengthens.

Longer-term unemployment can be “very damaging to people’s lives and their working lives,” Mr. Powell said at a news conference this year.


Credit…Elizabeth Frantz for The New York Times

The risk of permanent job loss weighs heavily on workers like MacKenzie Nicholson of Nottingham, N.H., who lost her job with the American Cancer Society in June after the pandemic cut into the organization’s fund-raising. Her husband, a service manager at a Jeep dealership, kept his job after a brief furlough, but his income is not enough to cover their monthly expenses.

Ms. Nicholson plans to start picking up gig shifts with DoorDash and Uber in the evenings, once her husband gets home from work and can take over watching their two young children.

“I’ll be saying goodbye to my husband when he gets in the door,” she said. “It won’t be ideal for our marriage.”

It’s hard for Ms. Nicholson, 30, to square the anxiety over meeting basic needs with the life she had one year ago, when she and her husband bought their first home, providing a sense of security. Now their mortgage payment feels like an albatross, and a simple trip to Target feels out of reach.

“My daughter ran out of toothpaste and I put it on the shopping list, and then realized we could use the sample bottles we get from the dentist to hold out for a few weeks,” Ms. Nicholson said. “I’m making disgusting casseroles with everything I have in the fridge so I don’t have to go grocery shopping.”

Lasting joblessness is a comparatively new problem in the United States. Europe, where social safety nets are more generous and labor rules are stricter, has long had high rates of extended unemployment. But economists once thought that the United States’ less restrictive, more dynamic labor market made it relatively immune. Even in the brutal recessions of the early 1980s, when the unemployment rate topped 10 percent, less than a quarter of job seekers had remained out of work longer than six months.

That has changed in recent decades, as the sluggish “jobless recoveries” that followed the past three recessions left a large share of workers unable to find jobs for months or years. In the aftermath of the Great Recession, nearly half of all job seekers had been unemployed long term. Many younger people dropped out of the job market altogether, while long-term unemployment for workers older than 50 stayed at high levels for years.


Credit…Maddie McGarvey for The New York Times

This is a very different crisis, both in swiftness and in breadth. Workers in entire industries were furloughed practically overnight, with little regard for their unique skills and performance. Employers may not fault future applicants for those lost jobs.

“It’s not clear to me that anyone’s going to hold it against you that you were an unemployed waiter for nine months,” said Jay Shambaugh, a George Washington University economist.

But there is mounting evidence that the long-term jobless will face a harder road back to work. In August, newly unemployed workers — out of work less than five weeks — were twice as likely to find jobs as those out of work more than six months.

Many people who aren’t looking for work now because they believe they are on temporary layoff may find that their jobs never return. They may be “frozen in place by the uncertainty of not knowing what the economy is going to look like,” said Thomas Barkin, president of the Federal Reserve Bank of Richmond.

If losses do turn permanent, it’s unclear how quickly workers will be able to shift into new roles. People with similar backgrounds tend to apply for similar jobs, which could lead to a glut of available workers in categories that lack the demand to absorb them.

Jose Martinez, 47, a houseman at the DoubleTree Metropolitan hotel in Midtown Manhattan for 26 years, remains hopeful he will retain his job. He was laid off in April, and despite several setbacks, he said he expects to return this coming week because his union contract requires that workers be brought back according to tenure. His wife also works at the hotel, but she has not been there for as long and is more likely to remain out of work longer.

“There are hotels that are closing, but it’s mostly the smaller hotels,” Mr. Martinez said. “I have faith that I’ll be back at work.”


Credit…Jeenah Moon for The New York Times

Nathaniel Claridad is less certain what the future holds, though he, too, hopes for a return to normalcy. He was acting in a show in Florida when Broadway closed. Days later, the artistic director informed him and the rest of the cast and crew that they were free to go — they were shutting down as well.

Fast forward six months and Mr. Claridad, who had another show and a concert postponed and saw his job selling tickets at a Midtown theater wilt away, remains unemployed. He’s current on rent for the Washington Heights apartment he shares with his employed partner, and he’s hopeful that his shows will take place in 2021 — but he’s starting to pick up Zoom directing gigs here and there, and he is applying to teaching jobs.

“It’s getting to the time now where I have to decide what to do, in terms of income,” Mr. Claridad, 38, said. But there are downsides to looking for work when your colleagues with similar skill sets are doing the same.

“Talking with friends, it feels like the market is saturated with people like me who are looking for another source of income,” he said.

Labor supply also remains an issue. Employers report that many workers, including those who are older, are nervous about returning given the health threat. People with children, particularly women, are struggling to return to jobs because they have limited child care options with schools and day cares all or partly closed.

Women’s participation rate — the share working or looking for work — dropped last month to its lowest level since 1987, excluding April and May this year. The household employment survey suggested that they might have lost more than 140,000 jobs in September, though a separate survey of businesses showed them still eking out gains.

The people most at risk of getting stuck on the sidelines in this crisis are in many cases those least prepared to take the hit.

Minority groups have seen bigger spikes in unemployment during the pandemic era — and getting back to work is taking them longer, suggesting that they are likely to make up a disproportionate share of the long-term unemployed.

Black joblessness jumped higher earlier in the recession and is declining more slowly than that for white workers: It stood at 12.1 percent in September, compared with 7 percent for white adults. Hispanic unemployment jumped at the onset of the crisis but is declining relatively quickly. Even so, it stood at 10.3 percent last month.

Those groups hold far less wealth, so they are less financially prepared for a long period out of work.

For now, unemployment is falling across demographic groups as layoffs end, and some economists are hopeful that the rebound will continue — though most warn that recovery will remain incomplete until the virus is under control.

Mr. Barkin at the Richmond Fed is urging communities and policymakers to think about retraining options now, in recognition that some share of the work force may find that its old skills are obsolete.

“It’s a virtual certainty that there are going to be large scarring effects for workers in certain industries,” said Alicia Sasser Modestino, an economist at Northeastern University. “What will those workers do with the skill sets that they have?”

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New Layoffs Add to Worries Over U.S. Economic Slowdown

The American economy is being buffeted by a fresh round of corporate layoffs, signaling new anxiety about the course of the coronavirus pandemic and uncertainty about further legislative relief.

Companies including Disney, the insurance giant Allstate and two major airlines announced plans to fire or furlough more than 60,000 workers in recent days, and more cuts are expected without a new federal aid package to stimulate the economy.

With the election a month away, an agreement has proved elusive. The White House and congressional Democrats held talks on Thursday before the House narrowly approved a $2.2 trillion proposal without any Republican support. It was little more than a symbolic vote: The measure will not become law without a bipartisan deal.

After business shutdowns in the early spring threw 22 million people out of work, the economy rebounded in May and June with the help of stimulus money and rock-bottom interest rates. But the loss of momentum since then, coupled with fears of a second wave of coronavirus cases this fall, has left many experts uneasy about the months ahead.

“The layoffs are an additional headwind in an already weak labor market,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “As long as the virus isn’t contained, this is going to be an ongoing phenomenon.”

The concern has grown as measures that helped the economy weather the initial contraction have wound down. The expiration of a $600-a-week federal supplement to unemployment benefits was followed by a 2.7 percent drop in personal income in August, the Commerce Department said Thursday.

In a separate report, the Labor Department said 787,000 people filed new applications for state jobless benefits last week. The total, not adjusted for seasonal variations, was a slight decline from the previous week, but continued to reflect the highest level of claims in decades.

The most recent layoffs are not included in that figure, nor will they be reflected in September data to be released by the department on Friday, the last monthly reading on the labor market before the election. The report is expected to show a continuing slowdown in hiring, with barely half of the spring’s job losses recovered, although there is more uncertainty than usual around the estimates.

“This doesn’t bode well for the economy,” said Gregory Daco, chief U.S. economist at Oxford Economics. “When you combine the layoffs with fiscal aid drying up, it points to very soft momentum in the final quarter of the year.”

Furloughs of more than 30,000 workers by United Airlines and American Airlines began Thursday after Congress was unable to come up with fresh aid for the industry, though the companies said they would reverse the cuts if Congress and the Trump administration reached an agreement. A $50 billion bailout in March obligated the carriers to hold off on job cuts through Oct. 1.


Credit…Eve Edelheit for The New York Times

Credit…Stephanie Keith for The New York Times

Allstate announced Wednesday that it would lay off about 3,800 employees to reduce costs. Those are about 8 percent of the roughly 46,000 employees Allstate had at the end of 2019.

Houghton Mifflin Harcourt, one of the country’s largest book publishers, said Thursday that it was cutting 22 percent of its work force, including 525 employees who were laid off and 166 who chose to retire. The company is a major supplier of educational books and materials, a business hit hard by school closings.

The Walt Disney Company said Tuesday that it would eliminate 28,000 jobs, mostly at theme parks in Florida and California. Many of the workers had been on furlough since the spring, but the company said it was making the cuts permanent because of “the continued uncertainty regarding the duration of the pandemic.”

Travel, entertainment, and leisure and hospitality employers have been among the hardest hit by the pandemic, and they continue to lag even as other areas of the economy have reopened. The American Hotel & Lodging Association, a trade group, said that without new stimulus legislation, 74 percent of hotels would lay off additional employees and two-thirds would be out of business in six months.

“We’re in a different phase of the recovery,” Mr. Daco of Oxford Economics said, and with demand for many companies’ services stuck below where it was before the pandemic, “businesses are left with no other choice but to reduce costs.”

Consumer spending on goods — whether for immediate consumption, like food, or used over a longer term, like appliances — now exceeds levels preceding the pandemic. But outlays for services, which account for roughly two-thirds of the nation’s economic activity, remain down about 8 percent.

The economic picture is not completely bleak. Personal spending was up 1 percent last month, and readings of consumer confidence have been gaining. Helped by low mortgage rates, the housing market is on a tear in much of the country, lifting employment in residential construction 2.1 percent from June to August, according to the Associated General Contractors of America.

But for many Americans, the easing of economic growth has meant an unexpected return to the ranks of the unemployed.

When the pandemic struck in March, Alex Stern was furloughed from his job as a publicist at a public relations firm in New York. He was called back in May after the agency, which works with companies in the food and beverage industry, received a loan through the federal Paycheck Protection Program.

Credit…Michelle V. Agins/The New York Times

But the company struggled to stay afloat, and Mr. Stern was permanently laid off on Tuesday.

To pay the November rent, he will have to borrow money from his parents, he said. He is considering moving back to his childhood home in Pennsylvania until he can find a new job.

“I don’t want to leave New York, and it’s hard because I’m almost 30 years old and I don’t know what I’m going to do next in life,” Mr. Stern said.

Among those affected by the Disney cutbacks is Taisha Perez, 29, who had worked part time as a drummer at the Animal Kingdom Theme Park at Walt Disney World in Orlando, Fla., for nearly three years.

The job gave her both a steady source of income and time to pursue her passion, television acting. “It’s honestly my favorite job that I’ve ever had,” Ms. Perez said. “I loved putting a smile on people’s faces.”

When she was furloughed in mid-March after the pandemic hit, she thought she would be out of work for just a few weeks. But on Tuesday, a text message from her union representative told her that her job would not be coming back.

“I was just in shock,” she said. “I couldn’t believe it.”

Ms. Perez said she could pay her rent and utilities on the roughly $250 a week she receives in state unemployment benefits, but could not afford any extra expenses, like the car she needs after hers broke down in March.

For those like Ms. Perez who lost work earlier in the year, the end of the $600 federal unemployment supplement has added to financial hardships.

Joann Taylor, a 45-year-old catering coordinator at a McAlister’s Deli franchise in Houston, used to work about 30 hours per week. But when the pandemic hit, her boss put her in an on-call position for deliveries only.


Credit…Todd Spoth for The New York Times

As a result, her hours were cut so severely — sometimes to two a week, or none at all — that she qualified for unemployment insurance, including $300 a week in Texas benefits before taxes.

But when the $600 weekly supplement expired at the end of July, Ms. Taylor began struggling to pay her monthly bills, including $1,240 in rent, $180 for electricity, a $240 car payment and $155 for auto insurance.

Determined to provide for her daughters, who are 6 and 14, she used the time while underemployed to get a license to sell life and health insurance. Now she’s looking for an agency to take her on, hoping for steadier income.

Until then, without further aid from Congress, Ms. Taylor is worried about paying the rent and buying groceries.

“I will have to go to every church around me and ask for help,” she said. “I will stand in food lines with the kids, because I cannot leave them at home. I will apply anywhere that I can for help, because there’s no way that I can allow us to be homeless.”

Reporting was contributed by Ben Casselman, Niraj Chokshi, Emily Cochrane, Alan Rappeport and Elizabeth A. Harris.

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U.S. Household Wealth Rose Before the Pandemic, but Inequality Persisted

Families were making gains in income and net worth in the three years leading up to the pandemic, according to Federal Reserve data released on Monday, but wealth inequality remained stubbornly high.

Median household net worth climbed by 18 percent between 2016 and 2019, the Fed’s Survey of Consumer Finances showed, as median income increased by 5 percent. The survey, which began in 1989, is released every three years and is the gold standard in data about the financial circumstances of U.S. households. It offers the most up-to-date and comprehensive snapshot of everything from savings to stock ownership across demographic groups.

The figures tell a story of improving personal finances fueled by income gains, the legacy of the longest economic expansion on record that had pushed the unemployment rate to a half-century low and bolstered wages for those earning the least. Yet despite the progress, massive gaps persisted — the share of wealth owned by the top 1 percent of households was still near a three-decade high.

Nearly all of the data in the 2019 survey were collected before the onset of the coronavirus. Economists worry that progress for disadvantaged workers has probably reversed in recent months as the pandemic-related shutdowns threw millions of people out of work. The crisis has especially cost minority and less-educated employees, who are more likely to work in high-interaction jobs at restaurants, hotels and entertainment venues. Many economists expect the crisis to worsen inequality as lower earners fare the worst.

“The economic downturn has not fallen equally on all Americans and those least able to shoulder the burden have been hardest hit,” Jerome H. Powell, the Fed chair, said at a news conference earlier this month. “In particular, the high level of joblessness has been especially severe for lower wage workers in the services sector, for women and for African-Americans and Hispanics.”

The newly released 2019 data suggest that families with lower pretax incomes were catching up to their richer counterparts between 2016 and 2019. Families with high wealth, college educations, and those who identified as white and non-Hispanic — who all have higher incomes — enjoyed comparatively smaller earnings growth over the period, the Fed said.

Even so, inequality in both income and wealth remained high.

Since the survey started, families in the top 1 percent of the income distribution have gradually taken home a bigger share of the nations’ income while the share of the lower 90 percent of earners has gradually fallen. The bottom 90 percent’s income share increased slightly in 2019 — reversing a decade-long decline — but a Fed report on the data noted that the rebound happened from record lows and only took the group back to roughly its share from 2010 to 2013 share.

Affluent families have held a growing share of the nation’s wealth over recent decades, and they retained that advantage as of 2019. In 1989, the top 1 percent of wealth holders held about 30 percent of the nation’s net worth, but that had jumped to nearly 40 percent in 2016 and was little changed in the latest survey, Fed economists said.

Families in the bottom half of the wealth distribution held just 2 percent of the nation’s wealth in 2019, the Fed data and a related report showed.

The wealth measure does not include defined benefit pension plans and Social Security benefits, which are hard to value. An augmented measure that incorporates pension plans still shows that wealth at the top has still risen, but by less, according to a Fed report.

The concern now is that inequality — especially in income, which derives heavily from wages — could increase again as workers at the bottom lose jobs.

The unemployment rate was 8.4 percent in August, according to the Labor Department, but the rate was 13 percent for Black people. Likewise, the jobless rate for those with less than a high school diploma was more than twice that for adults with a bachelor’s degree or more.

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U.S. Risks Repeating 2009 Mistakes as Economic Recovery Slows

Trillions of dollars in federal aid to households and businesses has allowed the U.S. economy to emerge from the first six months of the coronavirus pandemic in far better shape than many observers feared last spring.

But that spending has now largely dried up and hopes for a major new aid package ahead of the Nov. 3 election are all but dead, even as the virus persists and millions of Americans remain unemployed. Already, there are signs that the economic rebound is losing steam, as some measures of consumer spending growth decelerate and job gains slow. Applications for jobless benefits rose last week, with about 825,000 Americans filing for state unemployment benefits.

The combination of a moderating economic rebound and fading government support are an eerie echo of the weak period that followed the 2007 to 2009 recession. In the view of many analysts, a premature pullback in government support back then led to a grinding recovery that left legions of would-be employees out of work for years. In recent weeks, prominent economists have warned that both the United States and Europe, where many early responses are drawing to a close, are at risk of repeating that mistake by cutting off government aid too soon.

“The initial response was good, but we need more,” said Karen Dynan, who was chief economist at the Treasury Department in the Obama administration and now teaches at Harvard. The decision to pull back on spending a decade ago, she said, “really prolonged the period of weakness after the great recession.”

In Europe, some national governments that have spent aggressively to subsidize wages and curb layoffs are wrapping up those efforts. While large countries including Germany have indicated that they remain willing to provide more support, some economists warn that continued aid announced in France and elsewhere might fall short of what is needed in the near term.

In the United States, the situation is more immediately worrying. Leaders of both major political parties have expressed support, at least in theory, for additional aid. But the parties remain far apart on a deal, with Democrats pushing for a large package and Republicans arguing that a smaller plan will suffice.

The ability to reach a compromise in the coming weeks has been further complicated by a looming confirmation battle to replace Ruth Bader Ginsburg on the Supreme Court.

“That’s my great concern, that we’re going leave and not have a stimulus Covid package put together,” Senator Roy Blunt, Republican of Missouri, said Thursday. “I just think the Supreme Court thing used up a lot of oxygen. We’ll see. I’d like to see us get this done.”

One factor making an agreement even less likely: The economic revival is slowing, but not as sharply as some economists predicted would happen once expanded unemployment insurance and other programs began to ebb.

Credit…Amr Alfiky/The New York Times

Job growth slowed in July and August but remained positive. Consumer spending, which rebounded sharply once federal money started flowing in April, has likewise seen a more gradual rebound but has not fallen. Layoffs, as measured by claims for unemployment insurance, have continued to trend down, although they remain high by historical standards.

But many economists said that allowing the economy to slow at the current moment — with millions out of work or underemployed — could lead to long-term economic scarring. Employers have still hired back less than half of the 22 million workers they laid off in March and April, and the unemployment rate is higher than the peak of many past recessions. Even optimistic forecasts imply that gross domestic product will shrink more this year than in the worst year of the last recession.

“A stalling recovery when we’re stalling at near the worst point of the great recession is a terrible outcome,” said Tara Sinclair, an economist at George Washington University.

Jerome H. Powell, the Fed chair, made clear during congressional hearings this week that the economy, while recovering, would likely need more support.

“The power of fiscal policy is unequaled, by really anything else,” Mr. Powell said during testimony before a House subcommittee on Wednesday. “We need to stay with it, all of us,” adding, “the recovery will go faster if there’s support coming both from Congress and from the Fed.”


Credit…Pool photo by Kevin Dietsch

His colleague Eric Rosengren, president of the Federal Reserve Bank of Boston, said Wednesday that additional fiscal policy “is very much needed” but noted it “seems increasingly unlikely to materialize anytime soon.”

Some economists warn that the economy could begin to shrink again if Congress doesn’t act. Many households were able to save in the spring, thanks to federal aid and shutdown orders that kept them from spending money on restaurant meals and hotel stays. Households socked away about one-third of their disposable incomes in April, and while the savings rate has come down since, it remained sharply elevated from pre-crisis levels through July. That should create some buffer.

But those funds won’t sustain jobless families indefinitely now that extra unemployment benefits have expired and a partial supplement supported by repurposed federal funds is on the brink of running out. And businesses that were kept afloat during the summer may struggle when colder weather puts an end to outdoor dining and other activities.

There is an alarming precedent for what happens when support fades in the midst of an uncertain economic moment.

In the early stages of the 2008 financial crisis, Congress and the White House — first under President George W. Bush, then under President Barack Obama — pumped billions of dollars into the economy in the form of tax cuts for individuals and companies, infrastructure spending, extended unemployment benefits and other measures.

But Mr. Obama was unable to win approval for further large-scale stimulus efforts, and by 2010 Congress had effectively ceded to the Federal Reserve the job of managing the still-tenuous economic recovery.

“The lesson from the last crisis is that we had elevated unemployment for years, and it was a slow grind to work that down,” Robert S. Kaplan, president of the Federal Reserve Bank of Dallas, said in an interview Monday, explaining that he supports extending fiscal aid. “We have a chance here, if we act quickly, to mitigate the lasting damage that we saw.”

The post-financial crisis pullback in government spending was even more dramatic in Europe, where austerity was enforced across countries with weaker economies and higher debt levels, and where the European Central Bank raised interest rates in 2011, removing monetary support years before the Fed first tiptoed higher in 2015. Another slump ensued across European economies, bringing with it years of high unemployment, low inflation and weak growth.

There are important differences between the two crisis eras, especially in the United States. The economy was far stronger before the pandemic hit than in 2007, when inflated home prices, risky lending and financial engineering left the banking system vulnerable. And policymakers responded far more quickly and aggressively this time around.

The Fed cut interest rates close to zero in March, before data showing widespread economic damage had even begun to emerge. In the last crisis, the Fed didn’t take that step until the end of 2008, a year after the recession had begun. The European Central Bank rolled out massive bond-buying programs, something monetary policymakers in the currency block resisted in the immediate aftermath of the 2009 crisis.

But central banks have less room to adjust their policies to bolster growth now than they did a decade ago. Interest rates and inflation have fallen to low levels across advanced economies, stealing potency from monetary policy tools that work by making credit cheap.

That’s where fiscal policy — elected officials’ ability to tax and spend — comes in. Economic theory suggests that fiscal policy can be effective at times when monetary policy is not.

Initially, policymakers across advanced economies seemed far more willing to spend heavily and amass huge deficits than they were during the last crisis, at least in part because the same low interest rates robbing central banks of their power have made payments on government debt cheaper.

In the early days of this crisis, Congress approved legislation that sent direct payments to most American households, established a small-business assistance program that eventually handed out more than half a trillion dollars in grants and low-interest loans, and added $600 a week to unemployment checks, while simultaneously expanding the unemployment system to cover millions more workers. Together, the programs dwarfed the response to the last recession.


Credit…Joseph Rushmore for The New York Times

The aggressive response was successful. After shedding millions of workers in March and April, companies began bringing them back in May and June. Stimulus checks and enhanced unemployment lifted personal incomes in April and May, buoying spending. A predicted wave of foreclosures and evictions largely failed to materialize. By August, the unemployment rate had fallen to 8.4 percent, defying expectations that it would remain in double digits into next year.

While Mr. Powell said that government spending so far should get “credit” for that outcome, risks loom if key programs are allowed to permanently lapse. As unemployed workers run through their savings, they might pull back on spending, evictions and foreclosures could increase, and the fallout could scar the economy, he said during testimony on Thursday.

“There’s downside risks to the economy probably coming if some form of that support does not continue,” Mr. Powell said.

While the Fed has pledged to keep rates low and is operating a variety of programs meant to keep credit flowing to households and businesses, those are not a substitute for direct federal spending.

Economists said Mr. Powell appears to have learned a lesson from the aftermath of the last recession: When the Fed is forced to try to rescue the economy on its own, the result is a painfully slow recovery that takes years to reach many of the most vulnerable households.

The consequences of another slow recovery would almost certainly fall disproportionately on low-income families, many of them Black and Hispanic. Those workers were among the last to benefit from the plodding recovery after the last recession, and have been among the hardest hit by the current crisis.

“This pandemic, and our efforts here, could very well create even greater inequality in our nation than there was even before the pandemic,” said Representative Andy Kim, Democrat of New Jersey and a former Obama administration official. “Some are going to be able to get through this much, much better than others, and those that are not? This is one of those once in a lifetime situations that could very well cripple them for a generation if we don’t take some of the necessary steps in the next few weeks and months.”

Peter S. Goodman and Emily Cochrane contributed reporting.

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Manhattan’s Office Buildings Are Empty. But for How Long?

Even as the coronavirus pandemic appears to recede in New York, corporations have been reluctant to call their workers back to their skyscrapers and are showing even more reticence about committing to the city long term.

Fewer than 10 percent of New York’s office workers had returned as of last month and just a quarter of major employers expect to bring their people back by the end of the year, according to a new survey. Only 54 percent of these companies say they will return by July 2021.

Demand for office space has slumped. Lease signings in the first eight months of the year were about half of what they were a year earlier. That is putting the office market on track for a 20-year low for the full year. When companies do sign, many are opting for short-term contracts that most landlords would have rejected in February.

At stake is New York’s financial health and its status as the world’s corporate headquarters. There is more square feet of work space in the city than in London and San Francisco combined, according to Cushman & Wakefield, a real estate brokerage firm. Office work makes up the cornerstone of New York’s economy and property taxes from office buildings account for nearly 10 percent of the city’s total annual tax revenue.

What is most unnerving is that a recovery could unfold much more slowly than it did after the Sept. 11 attacks and the financial crisis of 2008. That’s largely because the pandemic has prompted companies to fundamentally rethink their real estate needs.

Credit…Vincent Tullo for The New York Times

Robert Ivanhoe, a real estate lawyer at Greenberg Traurig, said he had about 20 clients that had postponed searches for new offices. “They are putting a lot of thought into coming up with a new operating model — how much of my work force is going to work from home and for how much time?” he said. “It has never been turned upside down like this before.”

Real estate data confirms that. The number of office leases signed from January through August totaled 13.7 million square feet, less than half as much as the first eight months of last year, according to Colliers International, a real estate brokerage firm. By contrast, leasing hit an 18-year high at the end of last year with nearly 43 million square feet of new leases and renewals.

“When it comes to making decisions about office leases, the words are postpone, adjourn and delay,” said Ruth Colp-Haber, the chief executive of Wharton Property Advisors, a real estate brokerage firm.

Executives at the meal delivery company Freshly were ready to sign a lease for 50,000 square feet of office space at 2 Park Avenue, a stately, 29-story Art Deco tower in Midtown, in March.

But the coronavirus abruptly shut New York down for several months, and the company “hit pause” on its expansion, said Michael Wystrach, Freshly’s founder and chief executive. The company is still considering new office space, but he isn’t sure when it would sign a lease. “We are long-term believers in New York City.”

During any weekday in Midtown, the sidewalks are as empty as they usually are on a Sunday, underscoring how few employees have returned. In August, a survey of major employers by the Partnership for New York found only 8 percent of employees had returned to the office and most expected to bring employees back by next summer, and another quarter of them had not decided when they would return.

Elected officials, real estate tycoons and even Jerry Seinfeld, the comedian, have issued paeans to New York’s resilience, arguing that city has a history of bouncing back. The city will soon be brimming with people, by their telling.


Credit…Vincent Tullo for The New York Times

Credit…Vincent Tullo for The New York Times

But pessimists — including some New York hedge fund managers — see dark days ahead. They contend that companies will tell most employees to stay away until a vaccine is widely distributed and perhaps for much longer.

Which of those two visions is closer to being right will help determine how quickly New York regains its energy, economic health and tax revenue.

Investors are not expecting a quick recovery. Shares of companies with lots of New York office space like Empire State Realty Trust, which owns the Empire State Building, and SL Green Realty, which owns the immense new One Vanderbilt tower next to Grand Central Terminal, have plunged this year.

“I think the New York office market is going to be generally challenged for the next three to five years,” said Jonathan Litt, the founder of the hedge fund Land & Buildings. His fund published a report in May on why it thinks the shares of Empire State Realty Trust are overvalued.

A big part of the problem is that many companies are holding off on new leases.

In recent years, the biggest renters of office space have been co-working companies like WeWork, New York’s largest private tenant. Such businesses signed nearly 8 percent of new leases in Manhattan last year and 12 percent in 2018, according to Cushman & Wakefield. But co-working companies are in distress and some may not survive.

Other potential renters of offices are unsure what to do or are waiting for landlords to reduce rents, factoring in incentives like rent-free months and cash for office improvements. “What’s the point of signing a lease with a 15 percent decrease in rent if you think it’s going to go lower?” said Michael Colacino, the president of the brokerage firm SquareFoot.


Credit…Vincent Tullo for The New York Times

Some companies with leases that are ending this year or next appear to be kicking the can down the road, signing short-term extensions rather than committing to typical deals that last several years. In recent weeks, NBC Universal extended a lease for a secondary office at 1221 Avenue of Americas and the Stroock & Stroock & Lavan law firm did the same for its office downtown. But they both did so for just a year, according to Colliers. A spokeswoman for NBC Universal declined to comment and Stroock & Stroock did not return a call and multiple emails.

In normal times, owners of large office buildings would typically not entertain a one- or two-year lease extension for a large tenant, said Franklin Wallach, senior managing director of the New York Research Group at Colliers. “They see that new leasing activity has dropped off while the amount of sublet space coming into the market is on the rise, so the average landlord wants to keep the tenant in the building.”

One of the biggest concerns is that companies could soon start trying to sublease hundreds of thousands of square feet of space that they are not planning to use anytime soon. For companies seeking offices, sublets often provide a shorter lease at a steep discount to market prices.

Starr Insurance Companies, which is led by Maurice R. Greenberg, is seeking to sublet 190,000 square feet that it leases at 399 Park Avenue, according to Colliers. And First Republic Bank, which signed a 211,521-square-foot lease last April for 410 Tenth Avenue, put 151,000 square feet up for sublet, according to a report from the real estate broker Savills. Spokesmen for Starr and First Republic declined to comment.

Sublet space made up about a quarter of the total office space available in New York at the end of the second quarter, according to Savills, and many real estate brokers said they expected that to increase in the coming months.

In January, Ms. Colp-Haber was showing offices to a construction company that she said was in the market for a five-year lease in Manhattan. Last month, the company signed a sublet for one year at a 40 percent discount to the original lease, she said.

Still, property owners claim not to be overly worried because most tenants are paying their rent. They point out that office leases last for years and are very difficult to end early. And large financial firms, among the biggest tenants in New York, aren’t stressed as they were in the last recession.


Credit…Vincent Tullo for The New York Times

The most optimistic sign that New York’s office market will bounce back quickly is that big technology companies, which are gaining ground, are scarfing up square feet. Facebook in early August leased all of the office space — 730,000 square feet — in the Farley Post Office next to Penn Station. Amazon acquired the former Lord & Taylor building on Fifth Avenue in March from WeWork.

Retail tenants in Hudson Yards, the sprawling development on the Far West Side of Manhattan, may be reeling, but companies are still moving in to the project’s office buildings.

“They still believe New York is the place to have their business and grow their business,” said William C. Rudin, chief executive of Rudin Management Company. “The Amazon commitment is amazing; the Facebook commitment is amazing.”

Some landlords see encouraging signs in their office buildings in the suburbs, where social distancing is easier because people tend to commute by cars. This, they argue, suggests that employers and workers want to return to the office and more of them will make their way back to New York, too.

Anthony E. Malkin, chief executive of the Empire State Realty Trust, which owns the Empire State Building, said the number of people coming into his office buildings in Connecticut in mid-August was 40 percent of what it was a year earlier, and up from next to nothing in the spring because of the strict lockdown policies in place at the time. “That is a very high number and it’s growing.”

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A Gen-X Adviser to Biden Argues Equality Is Good for Growth

Heather Boushey, who is unofficially one of the top economic advisers to Joseph R. Biden Jr., does not play to type. When the progressive economist and I arranged to meet last December in a Midtown Manhattan coffee shop, I was expecting someone buttoned up, and I couldn’t find her in the room. Then she texted and waved from just a few feet away. She was wearing a Stephen Malkmus and the Jicks T-shirt — a niche band featuring the lead singer of the beloved 1990s indie group Pavement.

When Dr. Boushey and I met again, on a bright July morning in Washington, where she runs the Washington Center for Equitable Growth, it was impossible to miss her. She was masked, on her stoop, and had set out a table and chairs. In the intervening seven months, the coronavirus had killed more than 100,000 Americans and set off a recession with unemployment rates not seen since the Great Depression. Dr. Boushey had seen the pain coming.

She hadn’t predicted the virus, of course, but she had spent much of her career studying the financial fissures underlying the American economy. “Countries that have this deep inequality like we do are much more prone to financial crises,” she said, “in no small part because high wealth inequality leads to more debt, which just makes your economy more fragile.”

Dr. Boushey (pronounced boo-SHAY) has a strict policy of not commenting on her work for Mr. Biden, who also takes economic advice from Jared Bernstein and Ben Harris, both veterans of the Obama administration; Janet L. Yellen, the former Federal Reserve chair; and others. In this inner circle, Dr. Boushey is among those arguing against the persistent assumption in Washington that programs that benefit the poor and middle class are bad for the economy. In two volumes of data-studded analysis published in the last four years, she has laid out a platform for what she describes as “strong, stable and broad-based economic growth” — basically, Washington-ese for a fight against plutocracy.

Credit…Cheriss May/NurPhoto, via Getty Images

In “Finding Time: The Economics of Work-Life Conflict,” released in 2016, she charted the changing structure of the American family since World War II. Promoting policies like universal access to paid sick days and affordable child care, Dr. Boushey contended that addressing suffering and inequality didn’t have to come at the expense of economic dynamism; such remedies, she says, can actually promote growth.

In “Unbound: How Inequality Constricts Our Economy and What We Can Do About It,” published in October, she took the line of thinking further, laying out the ways that extreme inequality threatens democracy and the market itself.

“We need to recognize how economic power translates into political and social power,” she wrote, “and reject old theories that treat the economy as a system governed by natural laws separate from society’s.”

Dr. Boushey’s work offers a bird’s-eye view of policies that might have been — she was tapped to be the chief economist of Hillary Clinton’s transition team, had the 2016 election gone the other way — and that could find favor if Mr. Biden wins in November. As the federal government deploys trillions of dollars in a once-in-a-century economic emergency, Dr. Boushey is at the forefront of a rising generation of economists rethinking age-old conundrums, like unemployment, competition and the very nature of economic growth.

In “Finding Time,” Dr. Boushey, who was born in 1970, recounts a childhood in a middle-class neighborhood north of Seattle. Her father worked as a crane operator at the Boeing plant, and her mother took on a full-time job as a bank teller to make ends meet. Her parents were part of a trend. In the context of rising inflation and unemployment, many working-class families were feeling the same squeeze.

In the early 1980s, Dr. Boushey’s father was laid off. Her mother said some after-school activities might be put on hold. “That was the moment that I realized that actually economics — whether or not my parents have a job — affects whether or not I get to do the things that matter to me in my life,” Dr. Boushey said.

For decades, economists have often sought to frame their discipline as being at an arm’s length from politics. But Dr. Boushey and her peers, many of them Generation X, have embraced the field’s social and political roots. Informed by mistakes made during the 2008 recession, members of this cohort — including academics like Emmanuel Saez and Raj Chetty, and Jason Furman on the policy side — have turned their attention to the structural consequences of deepening inequality. They have eagerly addressed topics that challenge neoclassical economic theory, such as climate change, generational wealth and opportunity disparities.

In an essay published by the journal Democracy last summer, Dr. Boushey described the group as “a nascent generation of scholars who are steeped in the new data and methods of modern economics, and who argue that the field should — indeed, must — change.”

“If anything, economics is reckoning with its political past,” said Mehrsa Baradaran, a professor of law at the University of California, Irvine, who has written extensively about the racial wealth gap and serves on the Washington Center for Equitable Growth’s board of directors.

“Heather is really in the forefront of this,” Professor Baradaran added. “She’s talking to a different audience than I think a lot of other academic economists. She’s actually trying to collect effective policy and make economic changes by looking at the data we measure.”


Credit…Ting Shen for The New York Times

In addition to awarding grants for academic work, Dr. Boushey’s think tank publishes legislation-minded policy proposals. In “Recession Ready,” a collection of essays produced in 2019 with the Hamilton Project, a division of the centrist Brookings Institution, Dr. Boushey and her co-authors advocated what are known as automatic stabilizers — safety-net programs like enhanced unemployment and food stamp benefits that would be triggered without congressional debate if the economy slowed down. This year, Equitable Growth published “Vision 2020,” a set of 21 proposals by a range of scholars that included arguments for more affordable early childhood care and the rebuilding of U.S. labor market wage standards.

Many free-market economists remain skeptical of aspects of Dr. Boushey’s framework.

“I cannot question somebody on economic grounds who says, ‘You know what, I want to give up some efficiency for some more equity, fairness, compassion,’” said Casey B. Mulligan, a professor of economics at the University of Chicago, who has argued that some progressive policies could in fact impede recovery. “What I can question and criticize is that there wouldn’t be a trade-off.”

Michael R. Strain, who runs the economic policy program at the American Enterprise Institute and has appeared on Dr. Boushey’s podcast, has said some concern about inequality might be misplaced.

“In terms of the gap between the top and the bottom, I don’t see a lot of good evidence as to what exactly the problem with that gap is,” he said. “And I think there are lots of problems in terms of what’s happening with the bottom 20 or 30 percent, but I don’t know that you solve many of those problems by shrinking the income gap.”

Acknowledging the contested nature of her discipline, Dr. Boushey argues that no matter how one figures it, federal policy has not kept up with the changing structure of society — especially now, as Covid-19 craters the economy.

“In the face of a government that could not provide protective gear, could not protect people, hasn’t been paying attention to supply chains, all of these issues,” she said, “you’re going to have a demand — an ongoing demand — for some sort of active policy. So I think the question is then what that is.”

As we chatted on her stoop in July, Dr. Boushey gestured at our masks. “You’re doing this to protect me, I’m doing this to protect you,” she said. “We’re doing this for each other because we care.”

It was as good a summary as any of her holistic vision of prosperity. In her analysis, paid sick leave will translate into a more productive work force. Addressing inequality will reduce market distortions that ultimately inhibit growth.

On July 21, the Biden campaign released its “21st Century Caregiving and Education Workforce” plan, a 10-year, $775 billion proposal. Advocating subsidies and tax credits for child care and early childhood education, and an expansion of elder care programs, the plan would put into practice many of the policies Dr. Boushey has long endorsed. It would in theory encourage a progressive recovery, boosting the earning and bargaining power of care industry workers, who are disproportionately women of color.

The next week, on July 30, Dr. Boushey testified by video before the congressional Joint Economic Committee. Important components of the $2 trillion federal stimulus known as the CARES Act were set to expire, and Dr. Boushey pushed for extending a $600-a-week federal unemployment payment, a major point of contention in negotiations between the White House and congressional Democrats.

“If you want to be creating more jobs,” she said, “you have to sustain that consumer demand, you have to keep people paying their rent, you have to keep them spending in their communities — until we contain the virus.”

Back on her stoop, Dr. Boushey had mused on the policy ferment of the moment.

“How is it that ideas change?” she said. “You read about that in books, and if you get to live long enough and you get to be a part of these communities, you can sort of see how that happens. And I think that is sort of the only good thing about this particular moment in time.”

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Fed Chair Sets Stage for Longer Periods of Lower Rates

Jerome H. Powell, the chair of the Federal Reserve, announced a major shift in how the central bank guides the economy, signaling it will no longer raise interest rates to keep the unemployment rate from falling too far and that it will allow inflation to run slightly higher in good times.

In emphasizing the importance of a strong labor market and aiming for moderately faster price gains, Mr. Powell and his colleagues laid the groundwork for years of low interest rates. That could translate into long periods of cheap mortgages and business loans that foster strong demand and solid job markets.

The Fed chief announced the change at the Kansas City Fed’s annual policy symposium, which is being held via webcast instead of in Jackson Hole, Wyo., where it has taken place since 1982. Mr. Powell used the widely visible forum to explain the results of the central bank’s first-ever review of its monetary policy strategy, which it has been working on for the past year and a half. In conjunction with his remarks, the Fed released an outline of its long-run policy strategy.

“Our revised statement emphasizes that maximum employment is a broad-based and inclusive goal,” Mr. Powell said in the remarks. “This change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities.”

Mr. Powell’s speech could help define his tenure as chair, which began in early 2018 in the midst of the longest economic expansion on record and has run straight into the sharpest downturn since the Great Depression. The central bank is simultaneously facing a major short-run challenge — the coronavirus pandemic has shuttered businesses and cost millions of jobs — and daunting longer-run shifts in the United States and global economy. Interest rates and inflation have slipped lower across advanced economies, leaving policymakers with less room to reduce borrowing costs to coax growth following downturns.

Mr. Powell’s announcement codifies a critical shift in how the central bank tries to achieve its twin goals of maximum employment and stable inflation — one that could inform how the Fed sets monetary policy in the wake of the pandemic-induced recession.

The Fed had raised rates as joblessness fell to avoid economic overheating that might end in breakaway inflation. It took such an approach from 2015 to 2018, raising rates a total of 9 times as the jobless rate slipped steadily lower, trying to guard against price increases before they materialized. But higher inflation never showed up, and critics have asked whether the Fed slowed the economy without reason.

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The Fed’s updated framework recognizes that too low inflation is now the problem, rather than too high.

[Read more about how the Fed’s view on inflation has been shifting.]

Its revised statement says that its policies will be informed by “shortfalls” of employment from its maximum level, rather than by “deviations” — suggesting that the central bank is no longer planning to raise rates to cool off the labor market simply because unemployment has dipped to low levels.

“This change may appear subtle, but it reflects our view that a robust job market can be sustained without causing an outbreak of inflation,” Mr. Powell said.

The central bank is also formally shifting its inflation approach, aiming to average 2 percent inflation over time, rather than as an absolute goal. In doing so, the Fed is trying to convince the public and investors that it will allow prices to rise a little bit faster. If public inflation expectations slip, it can lock in slow price gains. Those feed directly into the level of interest rates, and leave the central bank with even less room to cut them during times of crisis.

“If inflation expectations fall below our 2 percent objective, interest rates would decline in tandem,” Mr. Powell said. “In turn, we would have less scope to cut interest rates to boost employment during an economic downturn.”

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Higher inflation may seem like an odd goal to anyone who buys milk or pays rent, but excessively weak price gains can actually have damaging effects on the economy. A circle of stagnation in which lower prices leave less room to cut rates has played out in countries including Japan.

“We are certainly mindful that higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes,” Mr. Powell said. “However, inflation that is persistently too low can pose serious risks to the economy.”

In a question-and-answer session after speech, Mr. Powell said the Fed was “talking about inflation moving moderately.”

If the Fed can achieve slightly higher price gains, it will translate into more room for future rate cuts — and buying that extra headroom is a crucial goal in 2020. Long-running economic changes, such as an aging population with different saving habits and weaker productivity gains, have weighed on the interest rate setting that neither stokes nor slows the economy. That has left the central bank with less recession-fighting wiggle room.

Still, Mr. Powell pointed out that it he and his colleagues “are not tying ourselves to a particular mathematical formula that defines the average.”

Some economists questioned whether the Fed will actually manage to achieve its higher inflation goal.

“The Fed is announcing this policy framework in part to push up inflation expectations,” said Seth Carpenter, a former Fed research official now at UBS. “In practice, however, getting above 2 percent is a long way off.”

Many of the changes the Fed announced Thursday formalize an approach it has edged toward over the past decade. The Fed was patient in beginning lifting interest rates following the recession from 2007 to 2009, even as unemployment fell.

When it did start to raise borrowing costs in late 2015, under Janet L. Yellen, it did so slowly. Even those gradual moves have seemed like they may have been overkill in hindsight. Price gains hovered below the Fed’s 2 percent target even as pre-pandemic unemployment held near a half-century low.

Under Mr. Powell’s leadership, the Fed has increasingly emphasized the benefits of that strong labor market, which pulled long-sidelined workers into jobs and helped to foster strong wage growth for those who earn the least. The update bookends that evolution toward greater patience and more tolerance — or even encouragement — of historically- low unemployment.

The long-run document promises that the central bank will continue to hold reviews, roughly every five years, and will continue to consult the public as it has done over the past year through its “Fed Listens” events. That could help it to deal with the challenges of very low interest rates as the economy moves forward, and it will keep the public in the loop about how the Fed is approaching its targets.

“Public faith in large institutions around the world is under pressure,” Mr. Powell said in a question-and-answer session following his speech. “Institutions like the Fed have to aggressively seek transparency and accountability to preserve our democratic legitimacy.”

The Fed also explicitly noted in its statement that financial stability ranks among its key goals. In recent decades, expansions have ended when asset price bubbles — like the mid-2000s housing boom — got out of control, rather than at the hands of too-high inflation.

“Sustainably achieving maximum employment and price stability depends on a stable financial system,” the Fed said in its statement. “Therefore, the committee’s policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the committee’s goals.”

Mr. Powell’s remarks, and the central bank’s shift, are set against an unhappy backdrop.

Fed officials have taken action to support the economy as the pandemic-induced downturn drags on — cutting interest rates to zero, buying government-backed bonds in vast sums, and rolling out emergency lending programs. Still, more than one million people filed initial state jobless claims last week, data released Thursday morning showed.

The Fed has repeatedly emphasized that a strong job market and economy is an imperative goal, but that Congress will need to help achieve it.

“It is hard to overstate the benefits of sustaining a strong labor market, a key national goal that will require a range of policies in addition to supportive monetary policy,” Mr. Powell said.

He added that there was a strong economy under the surface of the ongoing weakness.

“We will get through this period, maybe with some starts and stops,” he said. Still, “we’re looking at a long tail” as people who work in industries heavily impacted, like travel and service, struggle to find new work in a process that could take years.

“We need to support them,” Mr. Powell said.

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The Fed’s Evolution Is Coming to a Computer Screen Near You

WASHINGTON — For more than a year, the Federal Reserve has wrestled with how to achieve its twin goals — maximum employment and stable inflation — in an era of tepid price increases and very low interest rates.

While not a major kitchen table topic, the Fed’s approach to monetary policy affects every household in America. When it lifts or lowers interest rates to slow or speed growth, it changes the cost of mortgages and car loans. Because its policies help to determine economic strength, they inform how many jobs are available and how long expansions last.

On Thursday, Chair Jerome H. Powell will have a chance to update America on the central bank’s soon-to-conclude framework review, in which it has revisited its policy tools for good and bad times, in a speech at the Kansas City Fed’s annual conference. The storied gathering of elite economists has been held behind closed doors in Jackson Hole, Wyo., since 1982. Because of the coronavirus pandemic, the event will be held remotely and streamed on the Kansas City Fed’s YouTube page this year, allowing the public to tune in for the first time ever.

Mr. Powell, who is scheduled to speak at 9:10 a.m., is expected to summarize what the Fed has discovered as it has spent 21 months discussing its future policy approach. He may stop short of offering up the full set of final results — the central bank has hinted that will happen when it updates its long-run policy statement, an outline of overarching principles that officials usually release in January but which many economists expect them to revamp at their Sept. 15-16 meeting.

Fed watchers expect the central bank to shift from targeting 2 percent inflation exactly to a more flexible approach, such as aiming for 2 percent on average over time. The exact details remain unclear, but the adjustment could lay the groundwork for long periods of near-zero interest rates and very low unemployment.

Officials have promised the coming tweaks will be more “evolution” than “revolution.” Yet they will represent the culmination of not just the review, but also a yearslong process in which economists have been forced to fundamentally rethink the relationship between unemployment and prices, and the role of central bankers in a modern economy that has undergone tectonic shifts as the population has aged and productivity growth has slowed.

“What we’ve seen over the past six to seven years is a gradual shift which, cumulatively, is powerful,” Stephanie Aaronson, a former Fed research official now at the Brookings Institution. Whatever adjustment is adopted “has to be seen in the context of all of the changes since the Great Recession.”

For decades, economists believed that as unemployment fell, worker scarcity would force employers to raise wages in order to hire. Businesses would raise prices to cover those labor costs, and inflation would result.

The Fed saw its role as choking off that upward price spiral before it got going. Because rate changes take time to work, that meant lifting the federal funds rate well before inflation actually materialized, in a bid to cool off demand and slow the economy.

But real life diverged sharply from the textbook scenario. Since the 2008 financial crisis, inflation has remained stubbornly below the Fed’s 2 percent target — a goal it is sees as just enough to grease the wheels of the economy without causing harmful side effects.

People once criticized Janet L. Yellen, a former Fed chair, and her colleagues for waiting so long to raise interest rates after the 2007 to 2009 recession, warning that they were setting the stage for runaway prices. Now, critics more often say that the Fed’s first post-recession rate increase — in December 2015 — came too early.

Lackluster inflation is not the only problem confronting the Fed. Interest rates have been falling across advanced economies, seemingly driven by gradual economic shifts such as population aging and weaker productivity growth. That leaves central banks with less room to bolster economic growth when times are tough by making money cheaper.

Because policy interest rates include inflation, weak price gains only serve to worsen the dilemma. Inadequate room to lower rates also leads to tepid recoveries and longer periods of slow inflation, feeding an unhappy cycle of stagnation.

Credit…Andrew Harnik/Associated Press

In light of the changes, the Fed has become more patient when it sets policy in recent years, allowing unemployment to drift lower in hopes of coaxing inflation higher.

By formally updating its framework, the Fed is trying to avoid a fate similar to the one that has befallen Japan. There, both interest rates and inflation trended downward for years, and the central bank has been forced to go to extreme lengths to try to stimulate the economy. Despite innovative and experimental policies — stock buying and negative interest rates among them — price increases have remained weak, trapped by public expectations. Europe is battling a similar phenomenon.

In part because the public’s understanding of future inflation seems to drive real-world economic results, the Fed is intent on clearly communicating what it is doing, and why. Officials have also increasingly taken the view that the Fed should try to be accountable to the people it serves.

The Fed went to great lengths to get the broader public involved in the policy overhaul, holding “Fed Listens” community events around the country alongside more typical academic conferences. On Thursday, Mr. Powell’s speech will be simultaneously available to academics and government officials — the usual Jackson Hole conference invitees — and armchair enthusiasts who have been following along from home.

While the Jackson Hole conference’s new democratization is driven by necessity, it is a fitting early conclusion for a review that focused on openness.

Wall Street analysts expect officials to set out a more concrete plan for the near future of interest rates once they have made the formal tweaks to their long-run statement. Fed officials signaled in their July meeting minutes that the updated document “would be very helpful in providing an overarching framework that would help guide the committee’s future policy actions and communications.”

To some degree, the anticipated adjustments will just commit to what is already happening in practice. Fed officials have given no indication that they are eager to raise rates, now at nearly zero, even if unemployment should fall quickly. Mr. Powell said at his late-July news conference that the framework changes “are really codifying the way we’re already acting with our policies.”

Still, “it’s a big change for them to codify and formalize it,” said Julia Coronado, founder of MacroPolicy Perspectives and a former Fed economist, in part because it means that Federal Open Market Committee, which sets interest rates, will now be tied into the approach. “It commits future committees.”

But it is unclear whether the adjustments Mr. Powell and his colleagues make will be enough to deal with the changes that have quietly transformed the modern economy.

The theoretical interest rate that would neither speed up nor slow down growth has dropped by more than 2 percent since the early 2000s, based on one popular model. Wringing out a few extra fractions of a percent by pumping up inflation will not fully restore that decline. And when it comes to crisis tools, longer-term interest rates have also dropped, rendering large-scale bond-buying programs meant to push them down less powerful.

“It’s not going to be enough,” Ms. Coronado said. After this crisis is over, she said, Congress should look at what tools the Fed has at its disposal to counter future crises. “We should be thinking big, and structurally.”

For now, Fed officials have turned to talking about government taxing and spending policy — the other lever that can stoke the economy, but one that is out of their hands. Central bankers have made clear that they believe Congress should pass another pandemic response package.

“The bottom line is that monetary policy is approaching its limits,” Paul Ashworth at Capital Economics wrote in an Aug. 25 note. “While Fed officials would never admit that publicly, that explains why they have become so outspoken in encouraging Congress to put more fiscal stimulus in place.”

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