Inflation drops to zero in July due to falling gas prices

Consumer prices were unchanged in July, as plunging prices for gasoline dragged the Consumer Price Index down to zero. Core inflation, which excludes energy and food, rose only 0.3%, below what analysts expected.

Driving the news: The Labor Department reported that overall consumer prices rose 0% last month, and are up 8.5% over the past year. That compares to a 9.1% year-over-year reported in June.

Why it matters: Falling gasoline prices are clearly giving American consumers some inflation relief, and the broader inflation picture was more favorable in July than economists had expected.

By the numbers: Gasoline prices fell 7.7% in July, dragging down headline inflation. Other items with falling prices included used cars and trucks (-0.4%) and airfares (down 7.8%).

  • But rents kept rising, a major factor in stubbornly high underlying inflation. Renters faced a 0.7% rise in costs.

What’s next: The Federal Reserve has indicated it intends to keep raising interest rates until there is clear evidence inflation is waning. After two straight months of extremely hot inflation readings, this report will be welcome news.

U.S. adds whopping 528,000 jobs in July as labor market booms

Employers added a stunning 528,000 jobs in July, while the unemployment rate ticked down to 3.5%, the lowest level in nearly 50 years, the Labor Department said on Friday.

Why it matters: It’s the fastest pace of jobs growth since February as the labor market continues to defy fears that the economy is heading into a recession.

  • Economists expected the economy to add roughly 260,000 jobs in July.
  • Job gains in May and June were a combined 28,000 higher than initially estimated.

The backdrop: The data comes at a delicate time for the U.S. economy. Growth has slowed as the Federal Reserve raises interest rates swiftly in an attempt to contain soaring inflation.

  • Many economists and Fed officials alike are pointing to the ongoing strength of the labor market as a sign the economy has not entered a recession.
  • Policymakers want to see some heat come off the labor market. They are hoping to see more moderate job growth as the economy cools, in order to ease inflation pressures.

Another 870,000 Americans filed new unemployment claims last week

https://finance.yahoo.com/news/jobless-claims-coronavirus-unemployment-week-ended-september-19-2020-184747657.html

Another 870,000 Americans filed for first-time unemployment benefits last week, unexpectedly rising slightly from the prior week to reaffirm a slowdown in the U.S. economic recovery.

The U.S. Department of Labor (DOL) released its weekly jobless claims report at 8:30 a.m. ET Thursday. Here were the main metrics from the report, compared to Bloomberg estimates:

  • Initial jobless claims, week ended Sept. 19: 870,000 vs. 840,000 expected, and 866,000 during the prior week
  • Continuing claims, week ended Sept. 12: 12.580 million vs. 12.275 million expected, and 12.747 million during the prior week

At 870,000, Thursday’s figure represented the fourth consecutive week that new jobless claims came in below the psychologically important 1 million level, but was still high on a historical basis. Nevertheless, the labor market has made strides in recovering from the pandemic-era spike high of nearly 7 million weekly new claims seen in late March.

“While jobless claims under a million for four straight weeks could be considered a positive, we’re staring down a pretty stagnant labor market,” Mike Loewengart, managing director of investment strategy for E-Trade Financial Corporation, said in an email Thursday. “This has been a slow roll to recovery and with no signs of additional stimulus from Washington, jobless Americans will likely continue to exist in limbo. Further, a shaky labor market translates into a skittish consumer, and in the face of a pandemic that seemingly won’t go away without a vaccine, the outlook for the economy certainly comes into question.”

On an unadjusted basis, initial jobless claims rose by a greater margin, or about 28,500, from the previous week to about 824,500. The seasonally adjusted level of new claims rose by 4,000 week on week.

By state, unadjusted claims in California – where joblessness due to the pandemic has compounded with labor market stress due to wildfires – were again the highest in the country at more than 230,000, for an increase of about 4,400 week-over-week. Georgia, New York, New Jersey and Massachusetts also reported significant increases in new claims relative to the rest of the country. Most states reported at least increases in new claims last week.

Continuing claims have also trended lower after a peak of nearly 25 million in May, and fell for a second straight week in this week’s report. But these claims, which capture the total number of individuals still receiving unemployment insurance, have not broken below the 12 million mark since before the pandemic took hold of the labor market in mid-March.

Consistently high numbers of individuals have been filing for, and receiving, jobless benefits from regular state programs, and those newly created during the pandemic. The number of individuals claiming benefits in all programs for the week ended September 5 – the latest reported week – fell for the first time following three straight weeks of increases to 26.04 million, from the nearly 29.8 million reported during the prior week.

Of that total, more than 11.5 million comprised individuals receiving Pandemic Unemployment Assistance, which is aimed at self-employed and gig workers who don’t qualify for regular unemployment compensation but have still been impacted by the pandemic.

One of the major downside risks to further improvement in the labor market has been concern that Congress may not soon pass another round of fiscal stimulus aimed at keeping individuals on payrolls during the pandemic. Economists have already said that the end of the last round of augmented federal unemployment benefits in late July has weighed on improvements in joblessness.

“The current picture suggests that growth has slowed sharply in the past three months, and that the labor market is stalling again in the face of rising infections and the sudden ending of federal government support to unemployed people,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note Wednesday.

The need for more fiscal stimulus to encourage the economy’s ongoing recovery has become a key talking point of policymakers including Federal Reserve Chair Jerome Powell and his colleagues at the central bank. In congressional testimony Tuesday and Wednesday, the Fed leader said further fiscal stimulus is “unequaled” by any other form of support that could be unleashed, with the central bank’s lending facilities having gone largely untouched by Main Street.

“The concept of the [congressionally authorized] Paycheck Protection Program was helpful because for many of those kinds of businesses – those businesses that don’t have cash reserves – the ability to get a forgivable loan if they stay open, if they keep people employed, was sound, and did give them the prospect of staying in business,” Joseph Minarik, The Conference Board chief policy economist and former Office of Management and Budget chief economist, told Yahoo Finance. “The notion that you have businesses that have been weak over the last few months and now have simply had to shut their doors, that’s a real problem, and it is not necessity going to be solved with a loan.”

 

 

 

 

Another 884,000 Americans filed new unemployment claims last week

https://finance.yahoo.com/news/jobless-claims-coronavirus-unemployment-week-ended-september-5-2020-165121299.html?.tsrc=fin-notif

Another 884,000 Americans filed for first-time unemployment insurance benefits last week, matching the previous week’s level.

The U.S. Department of Labor (DOL) released its weekly jobless claims report at 8:30 a.m. ET Thursday. Here were the main metrics from the report, compared to consensus estimates compiled by Bloomberg:

  • Initial jobless claims, week ended Sept. 5: 884,000 vs. 850,000 expected and 884,000 during the prior week
  • Continuing claims, week ended Aug. 29: 13.385 million vs. 12.904 million expected and 13.292 million during the prior week

Last week’s new jobless claims were upwardly revised slightly to 884,000, from the 881,000 previously reported. This marked the first time since March that jobless claims came in below 1 million for back-to-back weeks, as claims remained stubbornly elevated but off their peak from the worst point of the pandemic.

The past couple weeks of jobless claims appeared to improve considerably from the more than 1 million new weekly claims reported in mid-August. However, this was due to a technical change in the way the Labor Department made its seasonal adjustments, which applied for the first time to claims counted during the week ended August 28. Previous weeks’ claims were not revised to reflect the new counting method.

The change was made to account for the fact that the pandemic generated a far greater level of new claims per week than would typically occur over the course of a year, throwing off the Labor Department’s usual system of making adjustments for seasonal hiring trends.

Most economists agreed that the new methodology would produce a more accurate dataset on jobless claims during the pandemic period. It also produced a lower reported number of seasonally adjusted jobless claims than would have been generated under the previous method. Under the old method of seasonally adjusting claims, new jobless claims for the week ended August 29 would have risen to 1.02 million, according to an analysis by Ian Shepherdson, chief economist for Pantheon Macroeconomics.

“Interpreting the seasonally adjusted figures is complicated by a recent change in methodology, but in both an SA [seasonally adjusted] sense and an NSA [non-seasonally adjusted] sense, it looks like the trends for both initial and continuing claims filings have flattened out lately after a period with more notable declines,” JPMorgan economist Daniel Silver said in a note Thursday. “This flattening out has been evident in the initial claims data for a few months and in the continuing claims data for a few weeks and it is broadly consistent with the idea that the labor market recovery has lost momentum lately.”

Unadjusted claims have shown a clearer picture of the stalling recovery in the labor market. Last week, unadjusted new weekly jobless claims totaled 857,148, for an increase of 20,140 over the prior week. This was the fourth straight week of increases in unadjusted new claims.

Other economic indicators offered a more upbeat picture of the U.S. labor market. The Labor Department’s monthly jobs report released last Friday showed the U.S. economy added a greater-than-expected 1.371 million payrolls in August, and that the unemployment rate dipped more than anticipated to 8.4%. Wednesday morning, the JOLTS jobs report showed employers had more than 6.6 million job openings in July, topping expectations by over 600,000.

 

Many workers don’t get new paid sick leave, because of ‘broad’ exemption for providers, report finds

https://www.washingtonpost.com/business/2020/08/11/paid-sick-leave/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202020-08-12%20Healthcare%20Dive%20%5Bissue:29035%5D

Many health-care workers don't get new paid sick leave, because of ...

The New York attorney general sued the Labor Department in April over the agency’s interpretation of ‘health care provider’.

A government watchdog said in a report out Tuesday that the Labor Department “significantly broadened” an exemption allowing millions of health-care workers to be denied paid sick leave as part of the law Congress passed in March to help workers during the coronavirus pandemic.

Congress passed the Families First Coronavirus Response Act in March to ensure workers at small- and medium-size companies were able to take paid leave if they or a family member became sick with the coronavirus. The law exempts health-care providers as well as companies with more than 500 employees.

But an Office of the Inspector General report noted that a move by the Labor Department to more broadly expand how they categorize health-care providers ended up leaving far more workers without a guarantee of paid sick leave than the agency’s estimate of 9 million.

While existing federal statutes define health-care workers as doctors, someone practicing medicine or providing health-care services, the Labor Department’s exemption from paid sick leave included anyone employed at a doctor’s office, clinic, testing facility or hospital, including temporary sites. The report also found the agency also exempted companies that contract with clinics and hospitals, such as those that produce medical equipment or tests related to the coronavirus, the OIG found.

The report also suggested the Labor Department is not doing enough to enforce the paid-sick-leave provisions, as well as its existing laws on pay and overtime issues.

In an effort to be socially distant, the federal agency acknowledged it has been forgoing fact-finding, on-site investigations, where an investigator examines all aspects of whether an employer is complying with federal labor laws. Instead, the agency has been using conciliations, which are telephone-only reviews limited to looking into a single issue affecting one or a few employees, with no fact-finding.

Critics of the Labor Department’s more hands-off approach to the pandemic have seized on the report as another indication of the ways in which the Trump administration has abandoned its commitments to worker safety.

“The Inspector General’s report makes clear that the Department of Labor went out of its way to limit the number of workers who could take emergency paid leave,” Rep. Robert C. “Bobby” Scott (D-Va.), the chairman of the House Education Committee, said in a statement. “This absence of meaningful enforcement of our nation’s basic workplace laws creates a major risk to workers who are already vulnerable to exploitation amid record unemployment.”

Before the pandemic, limited or full on-site investigations, a more robust way the agency looked into pay and overtime issues, made up about 53 percent of its inquiries. But since March 18, only 19 percent of those inquiries have been on-site investigations.

Actions taken to enforce the sick-leave provisions in the Families First Coronavirus Response Act have skewed even further away from investigations: 85 percent have been resolved through conciliations.

The agency’s Wage and Hour Division responded to the OIG’s findings, noting that they were “developing and sharing models for conducting virtual investigations,” and that they also pledged to maintain a backlog of delayed on-site investigations to be tackled when it was safer to conduct those reviews.

But critics suggest the pandemic alone is not a sufficient excuse for the drop-off in investigations, some aspects of which could be done remotely.

“These numbers just look so different than the numbers that I’m used to seeing in terms of conciliations versus investigations,” said Sharon Block, a senior Obama administration labor department official. “It really does jump out. That 85 percent is just a really big number.”

The issue about expanding who gets to opt out of offering paid sick leave has been the subject of complaints, according to the OIG report, as well as a federal lawsuit filed by New York Attorney General Letitia James. That lawsuit argued that the Labor Department overstepped its authority by defining health-care providers in such broad terms, saying it could be skewed to include workers such as teaching assistants or librarians at universities, employees who work in food services or tech support at medical schools, and cashiers at hospital gift shops and cafeterias.

Judge J. Paul Oetken, of New York’s Southern District, struck down the Labor Department’s definition, as well as three other provisions last week — but confusion remains about whether his ruling applies only to employers in New York.

In an internal response to the OIG report, which predates the New York ruling, the Labor Department said that it agreed with many of the OIG’s recommendations and that it would continue to use its definition of health-care providers until the resolution of the federal lawsuit.

The Labor Department did not reply to requests for comment about whether it planned to contest the judge’s ruling, or the other findings in the report.

The inspector general pointed to other ways the department is not doing enough to adjust to the challenges of the post-outbreak world.

The OIG report said that while the agency’s Wage and Hour Division referenced the coronavirus in an operating plan in late May, it pointed out that the division “focuses more on what the agency has already accomplished rather than thinking proactively and describing how it will continue to ensure FFCRA compliance while still maintaining enforcement coverage,” the report noted.

The department did not provide any goals about the enforcement or provide any requirements for tracking and reporting the new violations created by the FFCRA.

“With the predicted surge of covid-19 cases nationwide in upcoming months as more Americans return to work and as a consequence, an anticipated increase in complaint call volume to WHD, it would be expedient of the agency to devise a detailed plan as to how it intends to address this issue,” the OIG noted.

The report is the latest to spotlight the Trump administration’s employer-friendly approach to worker safety and protections.

The Occupational Safety and Health Administration, the part of the Labor Department that investigates and is charged with upholding worker safety, has been criticized by workers and advocates for failing to issue citations for worker safety issues during the pandemic in significant numbers. It had only issued four citations out of more than 7,900 coronavirus-related complaints, according to figures from July 21.

 

 

 

A Third of Unemployment Benefits Haven’t Been Paid Out: Report

https://www.thefiscaltimes.com/2020/06/02/Third-Unemployment-Benefits-Haven-t-Been-Paid-Out-Report

A Third of Unemployment Benefits Haven't Been Paid Out: Report

The U.S. Treasury paid out $146 billion in jobless benefits in the three months ending in May as tens of millions of Americans lost their jobs due to the coronavirus pandemic. Although the number is massive – larger than all of the unemployment benefits provided during the depths of the Great Recession in 2009 – it’s smaller than it should have been, according to a new analysis by Bloomberg News. Crunching the numbers on weekly unemployment filings and average claim size, Bloomberg found that total jobless benefits should have come to roughly $214 billion during that time.

“The estimated gap of some $67 billion shows how emergency efforts to boost payments, and deliver them via creaking state-level systems, are lagging the needs of a jobs crisis that’s seen more than 40 million people file for unemployment as the economy shut down,” Bloomberg’s Shawn Donnan and Catarina Saraiva wrote Tuesday.

A tough calculation: Although it’s hard to put a precise number on the shortfall – the Labor Department pushed back against the method used by Bloomberg to develop its estimate – there is general agreement that there are many people who still haven’t received the unemployment assistance they are entitled to. “There’s a lot more money that should have gone out that has not gone out,” said Jay Shambaugh, an economist at the Brookings Institution who has been studying the issue.

And Bloomberg says its analysis likely provides a conservative estimate of the shortfall. Some states are still working through backlogs of unemployment claims – Texas alone is waiting to verify nearly 650,000 cases – and more than 7 million people are still owed retroactive benefits under the Pandemic Unemployment Assistance program for independent contractors.

Why it matters: In addition to the unnecessary suffering the delays are causing, the shortfall is reducing the positive economic effect that unemployment benefits are intended to provide. “On paper the U.S. strategy is very generous,” Ernie Tedeschi, a former U.S. Treasury economist now at Evercore ISI, told Bloomberg. “But that generosity on paper is meaningless if it doesn’t translate into actual money in people’s pockets when they need it.”

Diane Swonk, chief economist at the accounting firm Grant Thornton, said she is worried that lawmakers are experiencing “fiscal fatigue” as the crisis wears on, risking a falloff in aid that could prolong the recession. “We’re really talking about an economy that is going to be operating at a fraction of its capacity for a long period of time,” she told Bloomberg.