Live Market Updates: Stocks Climb as Stimulus Talks Continue

The American economic recovery continues to slow, stranding millions who have yet to find a new job after being thrown out of work by the coronavirus pandemic.

The latest evidence came Friday when the Labor Department reported that employers added 245,000 jobs in November, the fifth month in a row that the pace of hiring has tapered off. The figure for October was revised downward to 610,000, from the initially stated 638,000.

The unemployment rate in November was 6.7 percent, down from the previous month’s rate of 6.9 percent. But that figure does not fully capture the extent of the joblessness because it doesn’t include people who have dropped out of the labor force and are not actively searching for work.

November’s job totals were dragged down in part by the loss of 93,000 temporary census workers who are no longer needed now that the official counting has wound down.

More than half those knocked out of a job early in the pandemic have been rehired, but there are still roughly 10 million fewer jobs than there were in February. Many people in that group are weeks away from losing their unemployment benefits, as the emergency assistance approved by Congress last spring is set to expire at the end of the year.

“We’re in an unusual position right now in the economy,” said Ernie Tedeschi, an economist at the accounting firm Evercore ISI. “Far off in the distance there is sunlight” because of progress on a vaccine, he said, but until then, “we’re going to have a few of the toughest months of this pandemic, and there will be a lot of scars left to heal.”

Covid-19 caseloads have doubled in the past month, leading to new restrictions and tamping down shopping and other commerce. In much of the country, colder weather is likely to discourage outdoor dining, which many restaurants have depended on. And Congress has been unable to agree on a new spending package to help struggling businesses and households.

The share of Americans either working or looking for a job — a figure known as labor force participation — fell in November and remains far below levels seen before the pandemic, a sign that the recovery remains incomplete as 2020 nears its end.

The labor force participation rate declined to 61.5 percent last month, down from 61.7 percent in October. In February, before pandemic-tied layoffs started, the figure stood at 63.4 percent.

For workers in their prime working years, defined as 25 to 54, participation is now at 80.9 percent, down from 81.2 percent in October and 83 percent in February.

That labor force participation seems to be stagnating well below its pre-pandemic levels is a cause for concern. In the wake of the 2007-9 recession, labor force attachment for people in their prime working years remained depressed for years, serving as a sort of “shadow” source of would-be workers even as the unemployment rate declined.

It is unclear whether that dynamic will repeat itself following this downturn, which has been very different.

But as the pandemic drags on, workers are again finding themselves on the labor market’s sidelines. That has been especially true for prime-working-age women, who are disproportionately employed in service jobs most affected by efforts to contain the spread of infection and who have been more likely to drop out of the labor market because of family care responsibilities. That has mattered as schools fully or partly close, leaving children at home.

Federal Reserve officials and other economic policymakers are watching figures like labor force participation — and how they are playing out across different demographic groups — as they take stock of the recovery.

“The economic dislocation has upended many lives and created great uncertainty about the future,” Jerome H. Powell, the Fed’s chair, told lawmakers in testimony this week, adding that “we will not lose sight of the millions of Americans who remain out of work.”

Distress can be found in nearly every corner of the labor market, but the pain is not evenly distributed.

Joblessness among minority groups was significantly higher in November than the 5.9 percent rate for whites: 10.3 percent of Blacks, 8.4 percent of Hispanics and 6.7 percent of Asians were unemployed.

The jobless rate for women edged down to 6.1 percent from 6.5 percent in October, but a chunk of that decline is because women, much more than men, have taken on family burdens caused by remote schooling and closed child care centers.

Female and Black workers fill a disproportionate share of service sector roles as well as government jobs, which have shrunk significantly since February. In November alone, 21,000 local education jobs were lost.

The pandemic has caused radical changes in the economy and the labor market in a short time. Large sectors of the economy like hospitality, travel and entertainment are floundering, while there have been spurts of growth in others like shipping, technology and cybersecurity that support work and shopping from home.

“The damage is uneven,” said Jed Kolko, chief economist at the job site Indeed. As is the case with most downturns, he said, there are “widening racial and ethnic gaps and more pain for people with less education.”

In other ways, he said, the damage to the labor market is different than in the past, with the loss of so many service jobs hitting bigger cities more.

Video

transcript

Back

transcript

‘There Is Momentum,’ Pelosi Says of Coronavirus Relief Deal

Speaker Nancy Pelosi expressed optimism a bipartisan stimulus deal could soon be reached after she and Senator Mitch McConnell agreed to find a compromise that could merge with a year-end spending package.

As you know, we are engaged in the talks on the omnibus bill. When I spoke to Leader McConnell yesterday, we talked about the possibility of putting a Covid package on the omnibus bill. But he and I, being appropriators, know that if you’re going to do that, you have to have an omnibus bill. And so we have to work through all of the provisions that are still unresolved there. We’re making progress. Senator Schumer and I believe that the framework — the bipartisan framework unveiled by the senators in a bipartisan way with the support of House members, Josh Gottheimer in the House from our side — on both sides of the aisle could be the basis for real bicameral negotiations. President-elect Biden has said that this package would be just at best, just a start. And that’s how we see it as well. It’s less money, but over a shorter period of time. And we need to do it to save lives and livelihood with the hope that much more help is on the way. There is momentum. There is momentum with the action that the senators and House members in a bipartisan way have taken with them. It could provide meaning relief for millions who are suffering. Economically, personally, health-wise, and so I’m pleased that the tone of our conversations is one that is indicative of the decision to get the job done.

Speaker Nancy Pelosi flashed fresh optimism on Friday that the House and Senate could soon reach a bipartisan deal on an elusive pandemic stimulus plan after she and Senator Mitch McConnell, the Senate majority leader, agreed to try to find an agreement that could be merged with an enormous year-end spending package.

“That would be our hope because that is the vehicle leaving the station,” Ms. Pelosi, Democrat of California, said at a news conference in the Capitol Friday morning, a day after her conversation with Mr. McConnell, Republican of Kentucky. The phone call marked their first conversation since the election.

Though Ms. Pelosi conceded there were still obstacles to an agreement, she insisted there would be “sufficient time” to close a deal before the Dec. 11 government funding deadline. She pointed to lower-than-expected job gains reported on Friday as an added accelerant.

“There is momentum. There is momentum,” Ms. Pelosi said. “The tone of our conversations is one that is indicative of the decision to get the job done.”

Mr. McConnell expressed similar resolve on Thursday, although he stopped short of endorsing the $908 billion outline proposed by a bipartisan group of moderates that Ms. Pelosi has said should be the starting point for talks, instead pressing for a far smaller bill.

Stimulus talks have been stalemated for months, with lawmakers unable to resolve differences over issues like liability protections for businesses, a Republican demand that Democrats have resisted, and providing federal aid to state and local governments, a top priority for Democrats that many Republicans oppose. They are also still struggling to resolve a number of policy disputes in the must-pass bills needed to keep the government funded beyond Dec. 11, though most involved in the process say that a resolution is feasible before the end of the year.

After months of insisting they would not accept a slimmed-down relief bill, Democrats now appear poised to accept less than one third of the spending they initially proposed to prop up small businesses, help the uninsured and jobless, boost state and local governments, and meet immediate public health needs, leaving other priorities unaddressed until President-elect Joseph R. Biden Jr. takes office Jan. 20.

The emerging compromise would revive lapsed federal unemployment benefits at $300 a week for 18 weeks, and provide billions of dollars in funding for small businesses, schools and the imminent distribution of a vaccine.

While a bipartisan group of senators is expected to continue working on finalizing legislative text through the weekend, there remain a number of significant hurdles. The policy divides that have helped derail attempts to reach agreement earlier this year persist even as lawmakers circulate a tentative outline.

Pressed on her reversal, Ms. Pelosi was defensive on Friday, saying her earlier, multitrillion-dollar proposals that the Senate called nonstarters were important parts of a negotiating strategy that may now yield results. She insisted that Mr. Biden’s election and the looming arrival of two vaccines amounted to “a total game-changer.”

“President-elect Biden has said this package would be at best just a start,” she said. “That’s how we see it, as well. It is less money, but over a shorter period of time, and we need to do it to saves lives and livelihood with the hope that much more help is on the way.”

• Wall Street continued its climb into record territory on Friday with a small gain, as growing confidence of a deal being struck on Capitol Hill for coronavirus relief outweighed a weaker-than-expected report on the labor market.

• “Compromise is within reach,” Senator Mitch McConnell, the majority leader, said on Thursday. Mr. McConnell and Speaker Nancy Pelosi spoke on the telephone on Thursday, their first conversation since the election. Democratic leaders, and some Republicans, have voiced support for a $908 billion framework for aid.

• The November jobs report, released Friday, showed a slowing recovery in hiring, with just 245,000 jobs added last month. On Thursday, the government reported that initial claims for state unemployment benefits in the United States dipped last week, after rising for two consecutive weeks.

• The S&P 500 rose about 0.9 percent, bringing its gains for the week to 1.7 percent. European stock indexes and most stock markets in Asia had also ended the day in positive territory.

• Oil futures also rose slightly, with Brent crude, the global benchmark, just short of the $50-a-barrel mark last hit in early March after major producers reached an agreement on Thursday for a modest increase in production in January. The agreement is a sign that they believe the world’s demand for crude is stirring after a mostly horrendous year for the oil business.

• Across the Atlantic, Brexit talks are continuing into perhaps their final weekend. Britain’s transition period for leaving the European Union ends Dec. 31, and it remains unclear if there will be a trade agreement for the new year. Any deal must be approved by the European Council, the bloc’s chief political body, made up of the heads of state of member countries. It holds its last meeting of the year next Thursday.

America’s unemployed workers — a large group nine months into the coronavirus pandemic — increasingly report that they have lost work permanently, rather than temporarily.

The share of jobless workers reporting that they are on temporary layoff has dropped in recent months, a trend that continued in November. But as that happens, an increasing portion have said that their layoffs are not expected to be temporary — 44.2 percent in November, up from 40.9 percent in October, based on Bureau of Labor Statistics data released Friday.

The report showed that 25.9 percent of the unemployed in November were on temporary layoff, while others had left their jobs or were entering or re-entering the job market.

To be classified as unemployed on temporary layoff, a person must have a return date or expect to be recalled to their job within six months. Because of the uncertainty tied to the pandemic, people who did not know whether they would be recalled have been counted by the bureau as on temporary layoff.

The danger that the pandemic will inflict lasting damage on the labor market is increasing as millions remain out of work, and as their unemployment appears likely to last until they can find new positions. Spells of joblessness can hurt workers’ résumés and can discourage some applicants, causing them to drop out of the search altogether.

If that happens because of the coronavirus-induced recession, it would probably unevenly hurt Black and Hispanic workers and those with lower education levels. Those groups have suffered heavy job losses as many of the shops, restaurants and other service businesses that disproportionately employ them have closed.

Economic officials have been urging Congress to provide additional economic support to cushion the blow. Several emergency programs, like forgivable small-business loans and expanded unemployment insurance, are about to end or already have.

“Additional fiscal support is essential to bridge past Covid’s second wave in order to avoid labor market scarring, reductions in crucial state and local services, and bankruptcies,” Lael Brainard, a Federal Reserve governor, said in a speech this week.

The Cheesecake Factory misled public investors about its financial situation in the spring, as the coronavirus began to spread and officials imposed restrictions on in-person gatherings, regulators said on Friday.

The Securities and Exchange Commission fined the company $125,000 over the matter. It’s a relatively small penalty, but the Cheesecake Factory — famous for its enormous menu, including more than 30 types of cheesecake — is the first to be penalized over its disclosures during the pandemic.

In regulatory filings on March 23 and April 3, the Cheesecake Factory told investors that its restaurants were “operating sustainably.” In fact, the 294-restaurant chain was losing about $6 million per week and, by its own internal estimates, had only about 16 weeks’ worth of cash left.

And while the company described steps it was taking to cope with the pandemic in its March filing — including borrowing $90 million from a corporate credit line — it did not disclose that it told landlords that it would not pay April rent because of the pandemic.

The S.E.C. said that the company disclosed more accurate information with private equity firms and other lenders that it was negotiating with for a financial lifeline. The regulator said the Cheesecake Factory agreed to settle the charges, without admitting guilt, and had cooperated with the investigation.

“When public companies describe for investors the impact of Covid-19 on their business, they must speak accurately,” Stephanie Avakian, the director of the commission’s enforcement division, said in a statement.

On April 20, the Cheesecake Factory announced a $200 million investment from the private equity firm Roark Capital. The company’s chief executive, David Overton, said at the time that the deal “meaningfully” enhanced the company’s liquidity “to navigate the near-term Covid-19 landscape.”

A representative for the Cheesecake Factory referred to a regulatory filing from the company on Friday acknowledging the settlement.