Job growth is stalling
Cumulative change in all jobs since before the pandemic
By Ella Koeze·Seasonally adjusted·Source: Bureau of Labor Statistics
The American economy produced little relief last month as the winter pandemic surge continued to stymie a rebound in the labor market. The weak showing comes in the midst of a fresh effort in Washington to provide a big infusion of aid to foster a recovery.
U.S. employers added 49,000 jobs in January, the Labor Department said Friday. The number reflected a disappointing month of hiring even as it provided hope of renewed economic momentum.
The unemployment rate fell to 6.3 percent, from 6.7 percent.
Unemployment rate
By Ella Koeze·Seasonally adjusted·Source: Bureau of Labor Statistics
The limited January gains followed an outright setback in December, when the economy shed jobs for the first time since April. December’s loss, originally stated at 140,000, was revised on Friday to 227,000. The gain for November was revised from 336,000 to 264,000.
There was a small victory in avoiding a second consecutive month of job losses, a prospect that some economists had feared given the one-two punch of rising coronavirus cases and waning federal aid.
“It is a positive sign that we got over those speed bumps and the wheels haven’t completely come off the car,” said Nick Bunker, head of research for the job site Indeed.
But Mr. Bunker said the gains were nothing to celebrate. The economy still has more than nine million fewer jobs than it did before the pandemic, and progress has slowed significantly since the summer. Unlike in December, when job losses were concentrated in a few pandemic-exposed sectors, the weakness in January was broad-based, with manufacturers, retailers and transportation companies all cutting jobs.
“It’s not clear that this one month assuages those concerns,” he said. “A hundred thousand here, a hundred thousand there is steady progress, but it’s not the sort of gains we need to see.”
Looking to strengthen the recovery, President Biden and congressional Democrats have been pressing for a $1.9 trillion relief measure. The legislation took a step forward early Friday when the Senate narrowly passed a budget resolution that will next go to the House, where Democrats will not need Republican support to approve it.
Some Republicans have said a smaller package would suffice, and others have said it is too soon for another round of aid.
Nearly a year after the pandemic devastated the job market, many forecasters predict that the economy will strengthen from here on. The $900 billion federal relief package enacted in December is expected to bolster the economy, with more aid potentially on the way. The vaccination push, though slower than hoped, is paving the way for wider reopenings even as coronavirus mutations around the world make the rollout more urgent.
“There should be a tailwind at the economy’s back,” said Julia Pollak, a labor economist at the online job site ZipRecruiter. “We’ll need all the tailwinds we can get.”
But the winter slowdown could leave lasting wounds. Though the economy has regained more than half of the 22 million jobs lost last spring, millions of people have been unemployed for a long period — potentially making it harder to rejoin the work force — or are no longer classified as unemployed because they have stopped looking for a job.
“It is difficult on a monthly basis to really see what the long-term impacts will be,” said Daniel Zhao, an economist with the career site Glassdoor. “But certainly the long-term economic scarring is something that is a huge concern for the recovery.”
As the pandemic recession drags on, more Americans are falling into long-term unemployment — a growing scourge that could threaten not just individual workers but the economic recovery as a whole.
More than four million people in January had been out of work for more than six months, the standard definition of long-term unemployment. That was up slightly from December and almost four times the number before the pandemic began.
The long-term jobless now account for nearly 40 percent of all unemployed workers, the biggest share since the aftermath of the recession of 2007-9. That doesn’t count people who have given up looking for jobs or who can’t work because of child care or other responsibilities.
The long-term jobless got a lifeline in December when Congress extended emergency programs that offer help to people whose regular benefits have expired. But another cliff is coming: Those programs are set to end in March, when there will almost certainly still be millions of people relying on them to pay rent and buy food.
Long-term unemployment continues to rise
Share of unemployed who have been out of work 27 weeks or longer
By Ella Koeze·Seasonally adjusted·Source: Bureau of Labor Statistics
“People still haven’t recovered from the December cliff, so they are just being kept in this constant cycle of panic,” said Stephanie Freed, a laid-off lighting designer who last year started an advocacy group for the unemployed.
Even with aid, however, the long-term jobless could face challenges that endure after the pandemic ends. Economic research has shown that when people are unemployed for extended periods, they have a harder time finding jobs. That — combined with businesses that have likewise faced a prolonged hibernation — could leave lasting economic damage.
“The longer a recession lasts, the more there can be permanent scarring,” said Beth Ann Bovino, the chief U.S. economist for S&P Global Ratings Services. “For those people who are long-term unemployed, those businesses that need to reopen, it takes time. It’s not like switching on and off the light bulb.”
Joblessness remained especially elevated for people of color in January as the pandemic continued to affect sectors where they are more likely to work.
The unemployment rate for Hispanic workers stood at 8.6 percent, exactly double where it was a year earlier. For Asian workers, joblessness was at 6.6 percent, more than twice its 3.1 percent level last January.
Black workers had the highest unemployment rate of any major racial or ethnic group, at 9.2 percent last month, up from 6.1 percent a year earlier. Unemployment for white workers is the lowest, at 5.7 percent, though that is still up significantly compared with 3 percent last January.
The figures underline that although the pandemic’s labor market effects have inflicted widespread damage, workers of color continue to shoulder a heavy burden as labor market weakness drags on.
Asian and Hispanic women’s unemployment rates grew the most
Unemployment rates for Black, Hispanic, Asian and white men
Unemployment rates for Black, Hispanic, Asian and white women
By Ella Koeze·Rates are seasonally adjusted except those for Asian men and women.·Source: Bureau of Labor Statistics
Women have also borne a major share of the pandemic’s economic fallout. The labor force participation rate — which tracks the share of the population either working or looking for jobs — is down 2.1 percentage points from last year for women 16 and older, compared with a 1.8-percentage-point drop for men.
Women may be lingering on the labor market’s sidelines for several reasons. They are more likely to work in service jobs affected by lockdowns and social distancing, and child care duties have fallen more heavily on mothers as the pandemic shutters schools and day care centers, studies have shown.
The Federal Reserve is attuned to those differences as it assesses the job market.
“When we say that the maximum employment is a broad and inclusive goal, what we’re seeing there is we’re not just going to look at the headline,” Jerome H. Powell, the Fed’s chair, said at a news conference late last month. “We’re going to look at different demographic groups, including women, minorities and others.”
The share of people working or looking for work remained depressed in January relative to its pre-pandemic level, underlining the labor market’s continued weakness.
The so-called labor force participation rate hovered at 61.4 percent last month, the Labor Department said on Friday, little changed from December and down from 63.3 percent in February 2020, just before the crisis took hold. The measure of work force attachment had slumped as low as 60.2 percent last April, and now it seems to have leveled off after rebounding only partway.
People who have left the labor force altogether have still not been replaced
Share of the working-age population who are in the labor force (employed, unemployed but looking for work or on temporary layoff)
By Ella Koeze·Seasonally adjusted·Source: Bureau of Labor Statistics
That so many people remain outside of the work force suggests there is more weakness in the labor market than implied by the slowly declining headline unemployment rate, which tracks only people who are actively applying for work. Continued shutdowns and health concerns could be keeping would-be job seekers on the sidelines.
“The third wave of the virus may have dissuaded some individuals from applying for jobs,” Spencer Hill at Goldman Sachs wrote in a note previewing the report.
For people in their prime working years, classified as 25 to 54 years old, labor force participation came in at 81.1 percent in January. That figure stood at 82.9 percent last February and fell to 79.8 percent during the worst part of the pandemic.
Economists and policymakers are closely watching measures of labor force attachment to gauge how far the job market is from full recovery. After the 2007-9 recession, participation for workers in their prime unexpectedly rebounded as some who were believed to have permanently dropped out of the job market began to look for jobs or take open positions.
“Clearly, we have a ways to go before we get back to the vibrant economy we had on the eve of the pandemic, when the unemployment rate stood at 3.5 percent and there were nearly 10 million more people on payrolls,” Charles Evans, the president of the Federal Reserve Bank of Chicago, said in a speech this week.
The Labor Department’s report on Friday that the economy added 49,000 jobs in January, while unemployment fell to 6.3 percent, is fueling a push by President Biden and congressional Democrats to pass a $1.9 trillion aid package as soon as this month.
The report showed the economy remains 10 million jobs below its pre-pandemic levels, with sluggish job growth outside of government: The private sector added only 6,000 jobs on net for the month. Revisions to November and December’s jobs data also showed the job market was struggling even more than previously known in the late fall and early winter.
Even the government gains, which were entirely concentrated in state and local education hiring, could be illusory. The department warned in its report that education layoffs caused by the pandemic last year “distorted the normal seasonal buildup and layoff patterns” in education, and possibly made January’s hiring numbers look better than they actually were.
Mr. Biden lamented the jobs numbers before a meeting with House Democrats in the White House to discuss the aid package, saying the 6,000 new private-sector jobs was far too small a figure. “At that rate it’s going to take 10 years before we get to full unemployment.”
“We can’t do too much here, but we can do too little,” he said. “We’ve got a chance to do something big here.”
Mr. Biden, who is set to speak about the economy later on Friday morning, has repeatedly urged Congress to spend aggressively on vaccine deployment, direct aid to individuals and families, expansions of the social safety net and other provisions meant to bring the pandemic to a swifter end and to bridge vulnerable people and businesses to the resumption of normal levels of economic activity.
He and his aides dismissed any sign in the latest report of an economy healing faster than expected and any reason to scale back on plans to provide more help.
The White House Council of Economic Advisers posted a series of messages to Twitter on Friday morning, calling the report “yet another reminder that our economy remains in a hole worse than the depths of the Great Recession and needs additional relief.”
Strong relief is urgently and quickly needed to control the virus, get vaccine shots in arms, and finally launch a robust, equitable, and racially inclusive recovery
— Council of Economic Advisers (@WhiteHouseCEA) February 5, 2021
“Strong relief is urgently and quickly needed,” the council wrote, “to control the virus, get vaccine shots in arms, and finally launch a robust, equitable, and racially inclusive recovery.”
Analysts had been expecting more significant job gains, and they largely called the report a disappointment. “This is not a good start to 2021,” said Nick Bunker, economic research director at the online jobs site Indeed. “Today’s report is essentially the opposite of what we need almost a year into the pandemic.”
Still, some Republicans have argued that the economy is just now starting to reap the benefits of a $900 billion aid package Congress approved in December and that the economy does not need an additional $1.9 trillion jolt. They are likely to point to the drop in the unemployment rate reported on Friday as further evidence that the aid bill should be smaller and more targeted.
Representative Kevin Brady, Republican of Texas, called the jobs report “weak” but said the economy did not need the type of stimulus package that Mr. Biden is proposing.
“Unfortunately, there is little stimulus in the president’s nearly two-trillion dollar ‘stimulus,’” he said. “And unless he begins to work with Republicans in earnest, Americans will suffer tepid job growth as the new normal.”
U.S. markets
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Stocks on Wall Street climbed for a fifth consecutive day on Friday, extending a rally that has brought the S&P 500 back up to record highs.
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The gains continued even after government data showed that U.S. employers added just 49,000 jobs in January, a weak recovery from an outright setback in December. But the rally also reflected expectations for a new stimulus plan, which continues to advance in Congress.
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The S&P 500 rose about half a percent, adding to a rally of more than 4 percent already this week. It has more than recovered from last week when a frenzy by retail traders in “meme stocks” like GameStop and AMC Entertainment unnerved markets. This weeks showing is the market’s best since early November.
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Oil prices have risen nearly 9 percent this week, the biggest jump since October. West Texas Intermediate futures were at $56.72 a barrel, while Brent crude, the European benchmark, approached $60 a barrel.
Robinhood, AMC and other meme stocks
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GameStop was volatile, falling in early trading before snapping sharply higher just minutes later. By midmorning Friday, the shares were up about 37 percent as they rebounded from a plunge earlier in the week.
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The rally came after Robinhood, the online trading app that enraged users when it restricted buying some of the most popular stocks, announced “there are currently no temporary limits” on buying shares.
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AMC Entertainment, another stock that has been targeted by small investors who have egged each other on with social media posts about their trades, also rallied from an early drop and was up more than 10 percent.
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Janet Yellen, the Treasury secretary, met with market regulators on Thursday to discuss the volatility caused by the frenzy of trading in GameStop, AMC and other stocks. Afterward, the Treasury Department issued a statement that said the markets’ “core infrastructure was resilient” and that the Securities and Exchange Commission should publish a study of what happened.
Europe
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Most European stock indexes were higher on Friday, with Italy’s still leading the way, as investors expressed confidence in Mario Draghi, the former head of the European Central Bank, forming a new Italian government. The FTSE MIB in Italy has gained close to 7 percent this week, compared with a 3.3 percent gain in the Stoxx Europe 600 index.
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Yields on 10-year British government bonds rose to 0.49 percent, the highest since March. Bond prices fell and the yields rose after the Bank of England said on Thursday that it wanted banks to be prepared for negative rates but it had no intention of introducing them imminently. The central bank said it expected the vaccine rollout to prompt a swift economic recovery later this year. The optimism has helped lift bond yields across Europe and the United States.
Asia
Among the winners in the meme-stock frenzy is the Koss family of Milwaukee. The Nasdaq-listed headphone maker that bears their name was swept up in the recent market frenzy, pushing the company’s share price up by nearly 2,000 percent in a matter of days. Koss, like other so-called meme stocks, was singled out by traders because it had attracted a lot of interest from short-sellers, which the buyers hoped to squeeze by bidding up the company’s shares.
Koss insiders sold some $44 million in stock this week, an amount worth more than the company’s entire market cap before crowds of retail traders sent its shares soaring. Michael J. Koss, the chief executive and son of the firm’s founder, sold shares worth more than $13 million, according to a regulatory disclosure. He was joined by other family members, executives and directors in paring their holdings.
The company, founded in 1958, was a pioneer in personal headsets, inventing the first stereo headphone. The company reported around $18 million in revenue in its latest fiscal year, with about a fifth of its sales going to Walmart. It employs just over 30 people directly, in addition to contracting with manufacturers in Asia.
Although executives at other companies at the center of the frenzy, namely GameStop and AMC, haven’t sold shares during the rally, there is nothing untoward legally about the move, provided that the insiders did not have access to private information about the rally. The Reddit-fueled surge in demand was largely conducted in the open, by investors cheering each other on via a public message board.
“As the stock goes up in price, whether it makes sense or not, the people on the end of the short sale suffer,” Craig Marcus, a partner at the law firm Ropes & Gray, told the DealBook newsletter. “People who hold the stock and have the opportunity to sell it and benefit from it, benefit from it.”
Kirin, one of Japan’s biggest breweries, announced on Friday that it would halt a joint venture in Myanmar after the coup earlier this week.
Beginning in 2015, the company set up two brewing companies in Myanmar, hoping to “contribute positively to the people and the economy of the country as it entered an important period of democratization,” Kirin said in a statement on Friday.
But in light of the coup, Kirin decided to exit its joint venture with Myanma Economic Holdings Public Company Limited, it said in the statement, citing the company’s connections to Myanmar’s military. It did not specify a time frame but said it was taking steps “as a matter of urgency.”
Kirin had been under pressure to cut ties with its partner in Myanmar after the release late last year of an Amnesty International report that said the Japanese brewer’s Burmese partner had directed payments to military units implicated in systematic violence against the Rohingya ethnic minority. The report’s allegations could not be independently verified.
In a statement, Amnesty International said Kirin’s decision showed it was “taking its human rights responsibilities in Myanmar seriously.”
Over 400 Japanese companies currently operate in Myanmar, according to data collected by Japan’s external trade agency.
Kuaishou, a short-video app, has captured the eyeballs of people across China. It has also caught the attention of stock pickers in Hong Kong, who nearly tripled the value of its shares in its public debut on Friday.
The app, which offers similar features to Periscope, Snapchat and Instagram, raised $5.4 billion and became the largest initial public offering by a Chinese internet company in Hong Kong. (Alibaba and other Chinese giants that are listed in Hong Kong brought in bigger hauls, but they debuted in New York before issuing secondary listings in Hong Kong.)
The company is now worth $160 billion, a valuation that surpasses that of Wells Fargo. More than 1.4 million individual retail investors in Hong Kong put in orders for Kuaishou shares ahead of its listing, according to a person with knowledge of the offering’s details, demonstrating the appetite for Chinese internet companies.
The video app has a large following outside of China’s high-rise metropolises. It is known for videos that focus on slice-of-life vignettes, often in rural areas. In a country that spends much of its waking hours online, Kuaishou has turned ordinary people like train conductors and welders into celebrities. It has also, at times, caught the attention of China’s censors.
Kuaishou’s fund-raising success is a vote of confidence for Hong Kong’s reputation as a top finance capital. Hong Kong is a part of China that operates under separate laws, but the city faces political uncertainty after a crackdown on a pro-democracy movement and the imposition of a national security law by Beijing.
The city has long served as a bridge between the world and mainland China, and for years has served as a home for multinational companies that relied on its legal protections and free flow of information, features that are not available on the mainland.
Beijing’s increasingly heavy hand in the city’s affairs has undermined some of these assumptions. The decision by Chinese regulators to pull the plug on the initial public offering of Ant Group just days ahead of its planned debut in November added to concerns about the risks of interference by Beijing.
Peloton, the home fitness company, reported a jump in quarterly sales and profits on Thursday. But its stock price fell more than 8 percent in after-hours trading, as supply-chain issues continue to weigh on the company and as investors consider whether demand for its bikes and treadmills may fall as gyms reopen.
Peloton’s value has soared nearly sixfold to $46 billion over the past year as pandemic lockdowns made its internet-connected fitness equipment a hot commodity. But the company has struggled to get the bikes to customers because of supply-chain challenges and delivery delays.
Peloton reported $1.1 billion in revenue for the three months that ended in December, a 128 percent increase from a year earlier. It reported a net income of $64 million, compared with a net loss of $55 million a year earlier. Peloton now counts 4.4 million members, it said, including 1.67 million who own its fitness devices and subscribe to its streaming classes.
In a letter to shareholders, Peloton said port closures on the West Coast and other “Covid-related factors” continued to delay deliveries. In December, the company acquired Precor, a fitness company with factories in the United States. It has also begun production in a new factory in Taiwan.
Peloton also said it would invest $100 million to expedite deliveries and would ship equipment by air rather than sea, incurring costs that are 10 times higher than normal.
“These unprecedented measures are for these unprecedented times,” John Foley, Peloton’s chief executive, wrote in a letter to customers.
And now for something completely unexpected: The New York Post recorded a profit for the first time in decades.
The colorful, pun-happy tabloid made money in the most recent quarter, its parent company, News Corp, said Thursday as part of its earnings report.
The Post, which was remade by Rupert Murdoch into the sensationalist, Fleet Street form he preferred, was famous within media circles for being a money-losing enterprise. But it afforded Mr. Murdoch a significant voice in American media. Its aggressive coverage of boldfaced names and intense focus on Wall Street made it a must-read among the powerful. And its financial losses, which at one point reached more than $40 million annually, were considered well worth the cost.
But the irony in The Post’s new profit milestone is that it comes at a time when the paper has arguably lost much of its sensationalist charm and no longer enjoys its reputation as a potent tabloid teaser.
Losses at Mr. Murdoch’s papers in Australia and Britain have forced News Corp to tighten belts at every division in the last few years. The Post also underwent deep cost cuts, laying off more than 20 staff members last year and announcing a leadership change in January. In October, some of the paper’s reporters revolted when they were asked to put their names to a dubious report tying Joseph R. Biden Jr. to his son Hunter’s lobbying activities abroad.
News Corp didn’t say exactly how much profit the paper made, but Robert Thomson, the chief executive, touted the moment and added, “Our task now is to ensure its long-term profitability.”
Mr. Murdoch’s other U.S. paper, The Wall Street Journal, continued to see strong financial results. The broadsheet had 3.22 million print and digital subscribers as of the end of December, a 19 percent jump over the previous year. Of that number, about 2.46 million were for digital-only customers, a 28 percent increase over the previous year, amounting to a gain of about 106,000 new digital customers for the period.
Dow Jones, which includes The Journal, the sister publication Barron’s, and Risk and Compliance, an expensive subscription product targeted primarily to banks and other big businesses, saw a 4 percent increase in revenue, to $446 million. Profit before taxes rose 43 percent to $109 million, a portion of which was driven by Risk and Compliance.
As at other papers, advertising revenue at Dow Jones, which includes The Journal, continued to fall, with a 29 percent decrease in print ads, but digital advertising rebounded, growing 29 percent over the previous year. Advertising decreased overall by 4 percent, the company said.
News Corp reported a 3 percent decline in its overall revenue, to $2.41 billion, and a pretax profit of $497 million for the three months ending in December, the company’s second fiscal quarter.
But the company’s biggest bright spot was at the book publisher HarperCollins, where revenue jumped 23 percent, to $544 million, as the division saw higher sales in every book category. News Corp recently lost its bid to Penguin Random House to buy the rival publisher Simon & Schuster.
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