Tag: Unemployment

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U.S. Budget Deficit Hit $3.1 Trillion Amid Virus Spending Surge

WASHINGTON — The federal budget deficit soared to a record $3.1 trillion in the 2020 fiscal year, official figures showed on Friday, as the coronavirus pandemic fueled a surge in spending and a drop in tax receipts brought by households and businesses struggling with economic shutdowns.

The federal government spent $6.55 trillion in 2020, while tax receipts and other revenue trailed at $3.42 trillion. Much of the spending came from the $2.2 trillion economic relief package that Congress passed in March, which was financed by government borrowing. Total debt held by the public topped $21 trillion at the end of September, a record level.

The shortfall underscores the long-term economic challenge facing the United States as it tries to emerge from the sharpest downturn since the Great Depression. Interest rates are low — meaning it costs less for the government to borrow money — but the ballooning deficit is already complicating policy choices as Republicans resist another large stimulus package, citing concerns about the U.S. debt burden.

The deficit — the gap between what the U.S. spends and what it earns through tax receipts and other revenue — was $2 trillion more than what the White House’s budget forecast in February. It was also three times as large as the 2019 deficit of $984 billion.

According to the nonpartisan Committee for a Responsible Federal Budget, the nation’s debt has now surpassed the size of the economy, amounting to 102 percent of gross domestic product.

“It is hard to believe we now owe a full year’s worth of output,” said Maya MacGuineas, president of the committee. “We weren’t supposed to cross this threshold for over a decade, but here we are.”

Ms. MacGuineas noted that the last time America’s debt exceeded the size of the economy was at the end of World War II, and that it took years of balanced budgets to bring it down.

The annual deficit was the largest since 2009, when the United States recorded a $1.4 trillion shortfall during the financial crisis.

In a statement accompanying the annual budget report, Treasury Secretary Steven Mnuchin highlighted the extraordinary level of money that has been pumped into the economy this year to combat the recession and prop up the economy. Russell T. Vought, the director of the Office of Management and Budget, said that as the recovery continued, the fiscal picture would improve as companies hired back workers and people began spending more money.

Federal agencies including the Treasury Department, the Small Business Administration, the Department of Agriculture and the Department of Health and Human Services saw their spending soar as they funneled loans to small businesses, subsidized farmers and provided funding for hospitals. Much of the money also went to households through stimulus checks and enhanced unemployment benefits that gave workers an extra $600 per week.

That spending was crucial to preventing families from falling into poverty and keeping businesses afloat. New research from the Federal Reserve released this week showed that Americans used one-time stimulus checks to save money and pay off debt.

Households spent just 29 percent of the money they received earlier this year, the Federal Reserve Bank of New York said in a post on its website, citing its Survey of Consumer Expectations, conducted in June and August. Another 36 percent of the cash was saved, while 35 percent was used to pay down debt.

Even the most ardent deficit hawks agreed that the virus, which shut down large swaths of the economy and tossed millions out of work, necessitated a huge fiscal response.

But with Election Day approaching, Republican lawmakers have shown little appetite for more spending, despite the fact that millions remain unemployed and previous aid has largely dried up. While the White House and Democrats want to bankroll another $1 trillion-plus aid package, Senate Republicans are preparing a $500 billion bill to vote on later this month. Speaker Nancy Pelosi and House Democrats support a $2.2 trillion package, while President Trump has endorsed going higher than the $1.8 trillion proposal the White House previously proposed.

On Thursday, he told Mr. Mnuchin, who is leading the negotiations, to make a bigger offer and said, “go big or go home.”

The Treasury secretary acknowledged this week that the deficit is a long-term concern but said now is not the time to worry about bringing it down. Given low interest rates and the severe nature of a health crisis that has stalled so many parts of the economy, he said the deficit was not an immediate priority.

“When you’re in a war — and we’re in a war against Covid — you spend what it takes to get rid of it,” Mr. Mnuchin said on Wednesday at the Milken Institute conference. “And that’s what we’ve done.”

Treasury officials had no estimate for next year’s deficit, but it is likely to be smaller unless another aid package is approved.

It appears unlikely that either Mr. Trump or his Democratic opponent, Joseph R. Biden Jr., would make significant progress in reducing the debt. While Mr. Trump has promised to tackle the deficit in a second term, he has also pledged to continue cutting taxes for individuals and corporations, while offering few details about how those would be paid for.

Mr. Biden wants to raise taxes on corporations and the wealthiest Americans to help pay for additional spending on health care, infrastructure and education. But those tax increases, while estimated to raise about $4.3 trillion, would not completely cover the costs of his spending proposals, according to the Committee for a Responsible Federal Budget.

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Unemployment Claims Rise Anew in Latest Sign of Economic Distress

The American economy is showing fresh signs of deceleration, hammered by layoffs, a surge in coronavirus cases and the lack of fresh aid from Washington.

The Labor Department reported Thursday that 886,000 people filed new claims for unemployment benefits last week, an increase of nearly 77,000 from the previous week. Adjusted for seasonal variations, the total was 898,000.

The rise follows the announcement of layoffs by major companies including Disney and United Airlines in recent weeks and an impasse between Republicans and Democrats over another round of aid for the economy. A recent jump in coronavirus infections, principally in the Midwest and Western states, only added to the grim outlook.

“It’s discouraging,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The labor market appears to be stalled, which underscores the need for new stimulus as quickly as possible.”

The economy rebounded strongly in late spring and early summer as lockdowns eased in many parts of the country and employers brought back workers from furloughs. But those recalls have slowed, even as federal stimulus efforts have waned.

In past recessions, 800,000 new claims for state unemployment insurance in a week would have been extraordinary. But over the last 30 weeks, that figure has become a floor, not a ceiling.

The latest numbers “point to a lot of churn in the labor market, and it appears the rate of firings has picked up,” said Michael Gapen, chief U.S. economist at Barclays.

More layoffs are expected as sectors like leisure and hospitality struggle. In some states, restaurants have been able to salvage some business by serving diners outside, but that option will disappear in many areas as winter approaches.

“The course of the virus determines the course of the economy,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “You can’t fully reopen with the contagion so high.”

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Credit…John Bazemore/Associated Press

A federal program set to expire at the end of the year, Pandemic Emergency Unemployment Compensation, is seeing a surge in new applications. It provides 13 weeks of extended benefits after the end of regular state payments, which typically last 26 weeks.

In the week that ended Sept. 26, the most recent period with available data, nearly 2.8 million people were getting the extended benefits, a jump from fewer than two million the previous week. That increase was roughly equal to the decline in the number collecting state benefits.

But receiving those benefits, which are administered by the states, isn’t so easy, experts say. “The transition from regular state benefits to P.E.U.C. is not going smoothly,” said Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, a left-leaning research group.

In some places, recipients of state unemployment benefits haven’t been notified of their eligibility for the federal extension, and aging computer systems have slowed the processing of applications.

If the program is not extended by Congress, “we’re going to see a disaster,” Ms. Shierholz said. “There will be a huge drop in living standards and an increase in poverty as well as downward pressure on economic growth.”

For workers facing the end of regular benefits, the extended payments have proven to be a lifeline.

Jared Gaxiola of Torrance, Calif., was laid off from his job as a freelance lighting technician in March, after live events were canceled across the country. When his state benefits ran out in mid-September, he was able to get a 13-week extension through Pandemic Emergency Unemployment Compensation.

Mr. Gaxiola, 35, hopes to find a job by the time the federal payments run out in December. But with entertainment work still scarce, he worries about how he will pay his rent in the new year.

“I could probably borrow money from my sister if I needed to,” Mr. Gaxiola said. “But I really don’t want to have to do that.”

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Credit…Jose A. Alvarado Jr. for The New York Times

Some workers who are caught between an unforgiving job market and uncertain prospects for help from the government have taken matters into their own hands.

For three years, Lea Polizzi worked more than 50 hours a week as a nanny and a freelance photographer in New York City. But in March, when the pandemic hit, the family she worked for on the Upper East Side left the city, and all of her photography gigs dried up.

Ms. Polizzi, 24, filed for unemployment benefits and started receiving about $200 a week from the state, as well as a $600 federal supplement. Those payments enabled her to meet expenses — including the $1,100 rent for her apartment in the Bushwick neighborhood of Brooklyn — while she looked for a job.

But the $600 payments expired at the end of July. Since then, Ms. Polizzi has used about 75 percent of her savings — roughly $4,000 — to pay bills.

“That was the money I had saved to use for vacations or emergency funds,” she said. “I was going to buy a new camera. And then as soon as everything started going down, I had to put everything on hold, because I knew that I was going to end up having to pay rent with it eventually.”

Ms. Polizzi recently received $900 from Lost Wages Assistance, a short-term supplement from the federal government, and she expects one more payment from the program in the next few weeks.

In the meantime, she is making masks, lingerie, hats and jewelry and selling the items online at $25 to $200 apiece.

She has made about 60 sales. “Hopefully, I’ll be able to make it work and just pay all my bills through my art ventures,” she said.

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Despite the challenging picture over all, a few workers have been able to find better-paying positions, securing shelter in the coronavirus storm.

Before the pandemic struck, Chloe Ezi was a lifeguard at a public aquatic center in Powder Springs, Ga. It was part-time work that paid $11 an hour, but she was able to bring in an extra $300 a week by teaching private swim lessons.

In March, Ms. Ezi was sent home during coronavirus lockdowns. Because she continued to be paid half her wages — about $75 a week — the pool operators told her that she was not eligible to file for unemployment benefits.

Ms. Ezi, 19, was called back to work in May, but because virus restrictions kept her from teaching private swim lessons, she was able to bring in only about $150 a week — barely enough to cover her $280 monthly car insurance bill, her $80 cellphone bill, and $100 monthly payments to Penn Foster College, where she is completing a dental assistant certificate program, plus groceries and other necessities.

“That’s not a lot to live off of,” Ms. Ezi said. “I was zeroing out my paycheck every month.”

To save money, Ms. Ezi lived with her boyfriend in his parents’ house.

“We’re all just a big family living in this house together,” she said. “It can get pretty stressful living with so many people like this.”

Tired of living in such close quarters, Ms. Ezi began looking for a job that would pay more. In August, she found a full-time position as a sales representative at a store that sells birding equipment, where she makes $13 an hour plus tips. She remains on the staff at the pool, where she still picks up an occasional shift.

Now she and her boyfriend can afford to rent a one-bedroom apartment in Smyrna, Ga. They moved in on Wednesday.

“My new job allowed us to finally get our own place,” she said. “I’m feeling pretty proud of myself right now.”

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U.S. Unemployment Claims Remained Elevated Last Week

Applications for jobless benefits remained high last week, even as the collapse of stimulus talks in Washington raised fears of a new wave of layoffs.

Unemployment filings have fallen swiftly from their peak of more than six million last spring. But that progress has recently stalled at a level far higher than the worst weeks of past recessions. That pattern continued last week, the Labor Department said Thursday: More than 800,000 Americans filed new applications for state benefits, before adjusting for seasonal variations, roughly in line with where the total has been since early August.

“The level of claims is still staggeringly high,” said Daniel Zhao, senior economist at the career site Glassdoor. “We’re seeing evidence that the recovery is slowing down, whether it’s in slowing payroll gains or in the sluggish improvement in jobless claims.”

That slowdown comes as trillions of dollars in government aid to households and businesses has dried up. Prospects for a new stimulus package, already dubious in a divided Washington, appeared to fall apart this week when President Trump said he was pulling out of negotiations. Economists across the ideological spectrum warn that the loss of federal help will lead to more layoffs and business failures, and more pain for families.

The continued high level of jobless claims, combined with large monthly job gains, highlights the remarkable level of churn still roiling the U.S. labor market. Companies are continuing to rehire workers as they reopen, even as other companies cut jobs in response to still-depressed demand for goods and services. The result is a job market that is being pulled in two directions at once — and economic data that can appear to tell contradictory stories.

Adding to the challenge for analysts and forecasters, the pandemic has thrown the data itself into disarray. For the second week in a row, the jobless claims data carried a Golden-State-size asterisk: California last month announced that it would temporarily stop accepting new unemployment applications while it addressed a huge processing backlog and installed procedures to weed out fraud.

In the absence of up-to-date data, the Labor Department is assuming California’s claim number was unchanged from its pre-shutdown figure of more than 225,000 applications, or more than a quarter of the national total. The state began accepting new filings this week, and is expected to resume reporting data in time for next week’s report.

While the lack of data from California makes week-to-week comparisons difficult, the bigger picture is clear: The economic recovery is losing momentum, even as millions of Americans remain out of work.

Monthly jobs data released last week showed that job growth slowed sharply in September, and that last spring’s temporary furloughs are increasingly turning into permanent job losses. Major corporations like Disney and Allstate have announced thousands of new job cuts. And with winter approaching, restaurants and other businesses that were able to shift operations outdoors during warmer weather could be forced to pull back anew.

Separate data from the Census Bureau on Wednesday showed that 8.3 million Americans reported being behind on rent in mid-September, and 3.8 million reported that they were likely to be evicted in the next two months. Both figures have changed little since August.

“It seems increasingly unlikely that we’ll have a deal before the election, and bills are due now,” Mr. Zhao said. “Every week that passes puts extra pressure on workers’ households and small businesses, so any delay in the stimulus is going to have a meaningful impact on Americans.”

The situation is particularly dire for people who lost their jobs early in the pandemic, many of whom are now nearing the end of their unemployment benefits.

Last week was the 29th week since mass layoffs began in March. In most states, regular unemployment benefits last just 26 weeks, meaning that many people have already exhausted their benefits.

In March, Congress created a program funded by the federal government for people whose state benefits have expired. The number of recipients under that program, Pandemic Emergency Unemployment Compensation, swelled to nearly two million in mid-September, up from 1.4 million a month earlier.

The program adds only 13 weeks of additional benefits, however, so people who lost their jobs in March will receive those benefits only until mid-December. And the entire program will expire at the end of the year if Congress doesn’t extend it.

A separate program, which existed before the pandemic, offers an additional 13 to 20 weeks of benefits, depending on the state. But the benefits are based on state economic conditions, and the rapid decline in the unemployment rate means that workers in several states, including Idaho, Wyoming and Utah, would no longer qualify for it. Missouri will join their ranks next week.

Another emergency program, Pandemic Unemployment Assistance, also expires at the end of the year. That program covers freelancers, self-employed workers, part-timers and others who don’t qualify for benefits under the regular unemployment system. More than 460,000 people filed new applications under the program last week, and millions are receiving benefits in total.

The net result is that potentially millions of workers could see their benefits expire this winter. Epidemiologists warn that cases of the coronavirus are likely to rise as temperatures drop, and winter weather could reduce job opportunities.

“People are going to have their backs against the wall, and it’s pretty much the worst time of the year for the program to end,” said AnnElizabeth Konkel, an economist at the employment site Indeed.

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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.

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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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Jerome Powell, Fed Chair, Says Economy Has ‘a Long Way to Go’

WASHINGTON — Federal Reserve Chair Jerome H. Powell delivered a message to his fellow policymakers on Tuesday: Faced with a once-in-a-century pandemic that has inflicted economic pain on millions of households, go big.

“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.”

Six 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 Mr. Powell highlighted — as he has before — that the economy’s resilience owes substantially to strong government assistance that’s been provided to households and businesses.

“Taken together, fiscal and monetary policy actions have so far supported a strong but incomplete recovery in demand,” Mr. Powell said. Those actions, he said, have “muted the normal recessionary dynamics that occur in a downturn,” like a hit to spending that causes further layoffs.

But critical supports, including expanded unemployment insurance benefits, lapsed at the end of July, and stopgap measures have since run dry. While lawmakers are debating another relief package, a deal is far from certain as Democrats, Republicans and the White House continued to spar over the size and scope of additional aid.

Top Trump administration officials have pointed to the falling unemployment rate as a sign that the economy is experiencing a rapid rebound. But Mr. Powell, who noted the labor market is improving more quickly than had been expected, said “there is still a long way to go.” He added that because “it appears that many will undergo extended periods of unemployment, there is likely to be a need for further support.”

One ongoing risk, he said, is that more typical recession dynamics could kick in should economic weakness drag on — a development that would only exacerbate the already uneven labor market costs, which have so far have been borne disproportionately by minorities, women 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.”

Mr. Powell, who was named to the chair post by Mr. Trump, has become an important influence for members of Congress during the pandemic recession, pushing for continued economic support and emphasizing that concerns about whether the government is taking on too much debt can wait until the crisis has passed. House Speaker Nancy Pelosi of California and Representative Richard E. Neal of Massachusetts are among those who have cited his advice when discussing their efforts to pass more stimulus.

Despite Mr. Powell’s increasingly frequent calls for sustained government help, lawmakers have been unable to reach agreement on additional aid for out-of-work families, struggling local governments and hard-hit businesses. That lack of aid could have wider economic repercussions if consumer spending slows and businesses are forced to cut more jobs.

Mr. Powell may be a credible voice in pushing for continued government support partly because he has a long track record of fretting about the national debt, a habit that he seems to be temporarily putting aside. While the government is spending far more money than it is taking in this year, he said Tuesday that “this is not the time to give priority to those concerns.”

Instead, he has reiterated time and again that it is important to the return the economy to full strength and that both the Fed and Congress need to provide ongoing help.

“This will be the work of all of government,” he 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.”

But Mr. Powell, along with many of his Fed colleagues, has also made clear that monetary and fiscal policy can only do so much to gird 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 comes in contrast to the message and example that has at times been held out by the Trump administration.

“We should continue do what we can to manage downside risks to the outlook,” Mr. Powell said, adding that doing so requires “following medical experts’ guidance, including using masks and social-distancing measures.”

One of his colleagues was even blunter — and more worried.

“Because of the United States’ inability to control the virus, we’ve experienced approximately 21 percent of the world’s deaths, despite housing only about 4 percent of the world’s population,” Patrick Harker, the president of the Federal Reserve Bank of Philadelphia, said in a separate speech on Tuesday.

The virus is still circulating despite coming down in some places, Mr. Harker said, and “in recent days, we’ve even seen alarming spikes in other areas, like New York City, that we had hoped had permanently suppressed their infection rates.”

The Fed itself has gone to great lengths to support the economy, cutting interest rates to near-zero in March, rolling out a massive 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 around, buying municipal debt and corporate bonds to shore up key markets.

Mr. Powell said he does not regret rolling out those never-before-tried programs, which have faced criticism from lawmakers and watchdog groups.

Some argue that the state and local government program isn’t generous enough. Others insist that the corporate program should come with more strings — like employee retention requirements. Such restrictions would have been difficult or impossible to implement in the Fed’s corporate bond program as currently designed.

“I don’t know how I would have been able to explain to the public that we didn’t go to the limit of what we can do,” Mr. Powell said during a question-and-answer session following his remarks. “History will judge how well we did.”

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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.

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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.

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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.

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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.”

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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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Jobs Report Shows Further Slowdown in U.S. Economic Recovery

Six months after the coronavirus pandemic tore a hole in the U.S. economy, the once-promising recovery is stalling, leaving millions out of work, and threatening to push millions more — particularly women — out of the labor force entirely.

The latest evidence came Friday, when the Labor Department reported that employers added 661,000 jobs in September, far fewer than forecasters expected.

It was the third straight month of slowing job growth, a worrying trend given the scale of the challenge ahead. The economy has nearly 11 million fewer jobs than it did before the pandemic, a bigger loss than the 8.7 million at the depth of the recession a decade ago.

Economists said the report underscored the need for more federal help. “It’s disturbing that we’re seeing such a dramatic slowdown in employment gains as we head into the fall,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “This is a red flag. We need aid now.”

The September slowdown was partly a result of public-sector job losses, particularly in school districts, where payrolls fell by more than 200,000. Economists said some of those jobs would come back if more schools opened for in-person instruction. But further cuts could be looming as state and local governments reel from a collapse in tax revenues.

The unemployment rate fell to 7.9 percent, down from a record high of nearly 15 percent in April. But even that good news carried a caveat: Nearly 700,000 people left the labor force, meaning they no longer counted as unemployed. And a rising share of the unemployed report that their job losses are permanent, rather than furloughs.


Unemployment rate



By Ella Koeze·Unemployment rates are seasonally adjusted.·Source: Bureau of Labor Statistics

The report was the last set of monthly jobs numbers — and one of the last major pieces of economic data — before the presidential election on Nov. 3.

Trump administration officials put a positive spin on the report. Larry Kudlow, the director of the National Economic Council, said on the Fox Business Network that analysts were misreading the numbers. “I think they are better than some people think,” he said. “The overall economy is looking good.”

It isn’t clear how much the economic data will matter to an election race upended by the news that President Trump tested positive for the coronavirus. But economists said recent data carried a clear message: Without a “Phase 4” spending package in Congress, the slowdown will only get worse.

“Everything depends on Phase 4 and whether we get that or not,” said Aneta Markowska, chief economist for the investment bank Jefferies. “There’s no middle ground.”

Prospects for a deal improved this week after seeming all but dead in September. House Speaker Nancy Pelosi on Friday floated the possibility that Mr. Trump’s coronavirus diagnosis could make an agreement more likely.

“This kind of changes the dynamic, because here they see the reality of what we have been saying all along: This is a vicious virus,” Ms. Pelosi said on MSNBC.

For small businesses in the industries hit hardest by the pandemic, the lack of federal assistance is an existential threat — and time is running out.

When the pandemic shut down movie theaters last spring, Cleveland Cinemas was able to stay afloat in part thanks to a loan under the Paycheck Protection Program. But that money is long gone. So are the cash savings that the company, which operated five theaters in the Cleveland area, had set aside to pay for new seating to help compete with big multiplexes.

Jon Forman, who has owned Cleveland Cinemas since 1977, isn’t sure what to do next. He has reopened only two of his theaters, and neither is attracting enough patrons to break even, even with fewer than 10 employees, down from 85 before the pandemic.

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Credit…Da’Shaunae Marisa for The New York Times
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Credit…Da’Shaunae Marisa for The New York Times

Many Americans remain wary of sitting indoors with strangers for two or three hours. And studios, hesitant to distribute big-budget movies when few people will pay to see them, have been delaying major releases until 2021.

Big chains may have the resources to wait for better days, but Mr. Forman isn’t sure he does. He has closed one theater permanently. Two others have been dark since March, and he is thinking about shutting the two reopened ones until demand picks up.

“We’re on a slope going down,” he said. “Without some sort of support, businesses are not going to survive.”

Stories like Mr. Forman’s reflect the mounting risks that as the crisis drags on, it will do lasting damage to the economy.

When unemployment spiked in March and April, most of the job losses were temporary layoffs or furloughs. But that is beginning to change. The number of people reporting they had been permanently let go rose to 3.8 million in September, nearly twice as many as at the height of the pandemic in April.


Job losses are more likely to be permanent than earlier in the pandemic

Share of jobs lost each month that are temporary layoffs



By Ella Koeze·Data is seasonally adjusted.·Source: Bureau of Labor Statistics

“The temporary layoffs in the beginning are turning more and more into permanent layoffs now as companies begin to see what their near future looks like,” said Erica Groshen, a Cornell University economist and the former head of the Bureau of Labor Statistics.

Prospects are particularly grim for those who lost their jobs in the first weeks of the crisis. More than 2.4 million people have been out of work for 27 weeks or more, the formal — if somewhat arbitrary — threshold for long-term joblessness. An even bigger wave is on the way: Nearly five million people have been out of work for 15 to 26 weeks.

Research has found that people who are out of work for six months or more have a harder time getting jobs even when the economy improves, and many end up leaving the work force. That can leave lasting scars on both workers and the broader economy.

Connie Sarmiento used to work three jobs to support her family as a single mother. She lost all of them in a matter of weeks: The Grand Hyatt in San Francisco, where she worked as a telephone operator, laid her off in March. The following month, she lost her jobs working at Oracle Park, the Giants’ baseball stadium, and Chase Center, home of the N.B.A.’s Golden State Warriors.

Initially, Ms. Sarmiento was able to make ends meet thanks to the $600 a week that the federal government added onto her $450-a-week unemployment payment from the state. But the supplemental benefits expired at the end of July, and she is falling behind on her bills.

Ms. Sarmiento’s $3,000 monthly rent was due Thursday, but she has only half the money she needs to pay it. “I have to tell my landlord that I am unable to pay,” she said. “I’m afraid he’s going to tell me I have to move out. That’s really scary.”

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Credit…Brandon Ruffin for The New York Times

Ms. Sarmiento hopes to return to work at the Hyatt this fall and at Oracle Park next season. But she worries about her prospects if those jobs don’t return.

“I feel hopeless,” she said. “Some of the only jobs I can find are in warehouses. I’m 60 years old and I don’t know if I can lift big, heavy stuff anymore. My body is getting weak.”

The September data carried particularly grim news about the pandemic’s impact on women. Initial job losses were concentrated among employers with heavily female work forces, like the hospitality and retail industries. While employment in those businesses has begun to bounce back, many women have been unable to return to work because they are disproportionately shouldering the burden of having children home from school.


Unemployment for women is worse than men’s across most demographics

Unemployment rates by race for men, women and over all


Black
Hispanic
Asian
White


By Ella Koeze·Rates are seasonally adjusted except those for Asian men and women.·Source: Bureau of Labor Statistics

The number of women working fell by 143,000 in September, and the share of women working or actively looking for work — a measure known as the labor force participation rate — dropped to 55.6 percent from 56.1 percent. Apart from April and May 2020, that is the lowest reading for women’s labor force participation since 1987.

Economists worry that the unexpected pause in their careers could prove to be a long-term setback for many women.

“We know that women leaving the work force to care for children for a while has lasting effects on their earnings, their seniority and their climb up the ladder,” said Julia Pollak, a labor economist with the career site ZipRecruiter. “Career interruptions have a huge effect.”

When schools and child care centers closed in March, Darsheen Sargent began bringing her 11-year-old daughter with her to her job as a home health aide in the Seattle area. During the day, she juggled two jobs at the same time — caring for her client, and running into the other room to help her daughter adjust to online schooling.

But Ms. Sargent, 48, grew increasingly concerned about the risk she posed to herself, her daughter, and her client by continuing to go to work each day. And she found balancing work and child care too much to handle. In mid-April, she decided to take a leave of absence from her job.

But the relief she felt at being able to focus purely on her daughter’s needs was quickly replaced by anxiety over keeping up with her bills now that she was no longer working. She has had to borrow money from friends to pay her rent, utilities and car payment.

As soon as schools and child care centers reopen, she plans to return to work. But she has no idea how long that will take.

“As a single parent, I’m the sole provider for my daughter, and I’m just doing the best I can to manage,” she said.

Jeanna Smialek, Alan Rappeport and Emily Cochrane contributed reporting.

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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.

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Credit…Eve Edelheit for The New York Times
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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.

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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.

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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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Unemployment Claims Fraud Exploits Weak Spots in System

The for-sale ad appeared last week in an underground internet bazaar that specializes in selling stolen accounts and data. It was for access to a filched unemployment insurance claim in California that had been approved and offered benefits worth $17,550.

The black-market sale of jobless benefits is just one sign that the unemployment insurance system — the main artery for delivering financial assistance to laid-off workers — has been besieged during the coronavirus crisis by criminal networks intent on bilking the government out of hundreds of millions of dollars.

In California, fraud was so pervasive that officials have suspended processing jobless claims for two weeks to put new controls in place and reduce a bulging backlog.

The U.S. Labor Department recently made fraud detection a priority, dedicating $100 million to combat the problem. But several state officials and cybersecurity experts say some of the efforts have been misdirected, designed to uncover workers misrepresenting their eligibility instead of large-scale identity theft.

“The focus continues to be on lying instead of stealing,” said Suzi LeVine, the commissioner of the Employment Security Department in Washington, one of the first states to be flooded with fraudulent claims.

Social service agencies have historically been preoccupied with preventing potential beneficiaries from cheating the government — individuals who lie about seeking a job or the date of their return to work.

“Anti-fraud systems are organized around that,” Ms. LeVine said. “Saying I was looking for a job when I was actually on a beach in Cabo.”

But most fraud is now being engineered by cybercriminals, some of them working together, who have stolen or bought other people’s identities and are using them to raid state unemployment systems.

Since March, Washington State has turned up nearly 87,000 impostor cases. From January 2018 to June 2019, there were 184.

Traditional fraud-prevention strategies, Ms. LeVine said, “will not help us catch these thieves.”

Think of it as the difference between an attack within and one coming from the outside. Previously the cheating came mostly from workers who were in the system and trying to get something they were not entitled to. Now “it’s people outside of the system who are impersonating other people or breaking in,” explained Roman Sannikov, director of cybercrime and underground intelligence at the cybersecurity firm Recorded Future.

Using stolen identities to steal from the government, of course, is not new. Such thefts have bedeviled programs from school loans to Medicare and disaster relief. But unemployment insurance has generally not been a ripe target because states have been reducing benefits and tightening access since the last recession and caseloads have been falling.

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Credit…Recorded Future

That changed after Congress moved in March to deliver assistance to suddenly jobless workers when the coronavirus outbreak upended the economy.

“Criminals go where the money is,” said Avivah Litan, an analyst at the research and consulting firm Gartner. After Congress passed the CARES Act, the emergency relief — including the Pandemic Unemployment Assistance program and a temporary $600 weekly supplement — was where the money was.

And that is where the bulk of the fraud has been aimed. Handled by the states, pandemic jobless benefits were meant to fill gaping holes in the safety net by covering self-employed, part-time and gig workers; independent contractors; and others ordinarily ineligible for unemployment insurance.

But the desire to quickly get money to households facing eviction, hunger or financial ruin made the program vulnerable to swindlers.

In Ms. Litan’s view, the federal government has not devoted sufficient resources to secure its systems against cybercrime and identity theft.

Some of the schemes, like those that hit Washington State in the spring, were linked by federal investigators to a Nigerian-based criminal ring called Scattered Canary. The ring used stolen Social Security numbers and other identity theft, and was suspected of operating in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.

Washington State officials shut down the unemployment system for two days in mid-May as part of an effort to halt illegitimate payments that ended up totaling $576 million. The state has recovered $346 million so far.

Parker Crucq, a senior threat intelligence analyst at Recorded Future, said the number and types of perpetrators had grown, ranging from organized networks and technological whizzes to bush-league hucksters.

“While many of these threats require knowledge of social engineering techniques, they likely do not require a degree of technical sophistication,” Mr. Crucq wrote in an assessment of unemployment insurance schemes. “This means that there is a low barrier to entry for potential scammers and criminals who are interested in getting involved with this form of fraud.”

In hacker forums and on the so-called dark web, where users can hide their identity and location, “some of these actors are specifically calling out state agencies by name, boasting that it’s quite easy to fill out applications on multiple occasions from information scraped from previous data breaches,” he said.

Over three weeks in September, the police in Beverly Hills, Calif., arrested 87 people from states as far away as Alaska and New York on charges related to unemployment insurance fraud. The accused were not working in tandem but followed a similar pattern, applying for benefits with Social Security numbers stolen from people who had died or were in prison or nursing homes, said Lt. Max Subin, a department spokesman.

Sometimes using false addresses and “mules” or intermediaries, they then picked up debit cards loaded with thousands of dollars’ worth of jobless benefits from the state’s Employment Development Department.

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Credit…Beverly Hills Police Department

Those involved used the cards — often several at a time — to embark on shopping sprees, buying high-end handbags, belts, wallets, shoes and clothing or renting luxury cars, the police said.

Identify theft is a particularly insidious form of unemployment insurance fraud, frequently pre-empting benefits for those entitled to them and undermining confidence in the program.

“The thing that is so maddening about impostor fraud is that it strikes at the core of how unemployment insurance systems operate,” said Scott Jensen, director of the Rhode Island Department of Labor and Training. “If fraudsters are giving us fake information, it’s hard to verify it.”

An inaccurate Social Security number, for instance, is spotted immediately. “But if a fake Scott Jensen comes in with the real Scott Jensen’s Social Security number, then it checks out,” he said. Most of the fraud is not discovered until people get letters or checks from the agency and call to say they never applied.

For years, “this has been a weakness that has been really hard to fix,” Mr. Jensen said. “What is different now is the scale.”

Fraud linked to identity theft made up about 3 percent of all unemployment claims last year, according to government audits. With the pandemic program, that figure has skyrocketed.

Last week, Arizona said it had flagged over one million of 2.4 million claims — more than 40 percent — as potentially fraudulent. Over the summer, Connecticut found that 77 percent of Pandemic Unemployment Assistance claims were faked.

With state unemployment claims, there is a built-in verification process because employees have to submit their W-2 tax form and a document from their employer showing that they are no longer employed. Pandemic Unemployment Assistance, by contrast, depends largely on individuals’ certifying that they are unemployed because of the coronavirus outbreak.

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Credit…Beverly Hills Police Department

Ms. LeVine in Washington State said that the U.S. Labor Department’s most recent directives focused more on data integrity, but that other efforts — like demanding that applicants certify their status each week — did little to catch the widespread fraud linked to identity theft.

“It’s better suited to catching people who might be lying or making sure they comply with eligibility requirements,” she said. “It will not help us fight impostor fraud.” For thieves, it’s just another box to check on an already fraudulent claim.

In response, a Labor Department representative said that “the department has been focused on ensuring program integrity” and that it provided a wide range of information, tools and resources as well as extensive technical assistance to prevent fraud and improper payments.

State and federal officials are caught between getting money as quickly and efficiently as possible to people who desperately need it and erecting roadblocks to cut off criminals from improperly collecting benefits.

“There are a lot of fraud tools,” like multifactor identification, said Mr. Jensen, Rhode Island’s labor chief, “but if you front-load the unemployment insurance system with them, then claimants can’t get through.”

Mr. Jensen contends that significant improvements and more sophisticated detection tools — including questions to verify a user’s identity, like the model of a first car — could be put in place quickly and inexpensively if unemployment insurance systems, antiquated in many states, switched to cloud-based computing.

“People are always going to try to steal money,” he said. “We have to work harder and faster and smarter to defeat them.”