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When weekly filings for state unemployment benefits dipped below one million this month, it looked like a glimmer of hope in an otherwise gloomy job market. But the break in the clouds didn’t last long: Data from the Labor Department last week showed that new filings for state benefits had jumped to 1.1 million.
The latest report, which will be released at 8:30 a.m. on Thursday, is expected to show another week of million-plus claims, according to economists surveyed by FactSet.
Economists say it is too soon to know whether the uptick in filings is a blip or reflects a sustained increase in layoffs. But there is ample evidence that the economic recovery has slowed since the spring. Job growth slowed in July, and real-time data from private-sector sources suggests that hiring has slumped further in August. On Tuesday, American Airlines said it would furlough 19,000 workers on Oct. 1, the latest in a string of such announcements from major corporations.
“It is worrying because it does signal that these large companies are pessimistic about the state of the recovery and don’t think that we are going to be returning to normal anytime soon,” said Daniel Zhao, senior economist at the career site Glassdoor.
Unemployment filings have fallen sharply since early April, when 6.6 million applied for benefits in a single week. But even after that decline, weekly filings far exceed any previous period. Roughly 30 million Americans are receiving benefits under various state and federal programs.
The continued high rate of job losses comes as government support for the unemployed is waning. The $600-a-week federal supplement to state unemployment benefits expired at the end of July, and efforts to replace it have stalled in Congress. President Trump recently announced he was using his executive authority to give jobless workers an additional $300 or $400 a week, but few states have begun paying out the new benefit, and the $44 billion allocated to the program is expected to last only a few weeks.
Economists warn that the loss of federal support could act as a brake on the recovery. Nancy Vanden Houten, lead economist for the forecasting firm Oxford Economics, estimated that the lapse in extra unemployment benefits would reduce household income by $45 billion in August. That could lead to a drop in consumer spending and further layoffs, she said.
Global markets slid on Thursday, as investors awaited a speech by the Federal Reserve chair that might signal a looser approach to stimulating the economy, and a weekly tally on U.S. unemployment claims, which are expected to exceed one million. Wall Street futures pointed to a modest decline when trading starts.
The benchmark Euro Stoxx 600 index fell 0.3 percent in morning trading, after a day when most Asian indexes declined. Japan’s Nikkei lost 0.4 percent, and Hong Kong’s Hang Seng fell 0.8 percent. In South Korea, the Kospi lost 1.1 percent.
Yields on the U.S. 10-year Treasury note slipped, and oil futures were slightly lower. Gold dropped about half a percent, to $1,943 an ounce.
In an address Thursday morning, Jerome H. Powell, the Fed chair, is expected to summarize a nearly two-year review of the central bank’s policy tools. Some Fed watchers expect the central bank to shift from targeting 2 percent inflation exactly to a more flexible approach, an adjustment that could lay the groundwork for long periods of near-zero interest rates and very low unemployment.
The U.S. labor market continues to lurch through the pandemic, and the latest report on weekly filings for state unemployment benefits is expected to show another week of million-plus claims, according to economists surveyed by FactSet. The tally dipped below a million earlier this month, offering some hope that rehiring had accelerated. But last week the figure for state benefits jumped to 1.1 million.
Thursday’s earnings report from Rolls-Royce, the jet engine maker, served as a reminder of the pandemic’s toll. The British company reported a half-year loss of 5.4 billion pounds ($7.1 billion), as the coronavirus’s impact on air travel hurt demand for its engines, which are used in both Airbus and Boeing aircraft. The company has been closing plants and has plans to shed up to 9,000 workers; its shares fell 9 percent.
Jerome H. Powell, the chair of the Federal Reserve, will deliver a speech at the Kansas City Fed’s research symposium Thursday morning — except this year, the storied annual meeting will take place online, rather than in Jackson Hole, Wyo., at the foot of the towering Teton mountain chain.
Mr. Powell spoke at the same conference’s opening in 2019, when the economy was growing steadily but facing uncertainty from President Trump’s trade war with China. Shortly after the speech, Mr. Trump tweeted about it, rhetorically comparing Mr. Powell to Xi Jinping, China’s leader: “Who is our bigger enemy, Jay Powell or Chairman Xi?” Mr. Trump wanted the Fed to lower interest rates more quickly.
This year’s speech promises to be dramatic again, but for different reasons. The Fed has slashed rates to near-zero and has rolled out a suite of emergency policies, many never before attempted, to try to help the economy make it through the pandemic.
At the same time, Mr. Powell and his colleagues have spent the past year and a half thinking through the future of monetary policy in a world of low interest rates and tepid inflation, a combination that has sapped the central bank’s tools of much of their former economy-stoking power. That framework review will be the topic of Mr. Powell’s remarks, which are scheduled for 9:10 a.m. Eastern time.
While the Jackson Hole research conference, which has been held since 1982, is usually an invite-only event attended by the world’s top economists, this year it will be webcast on the Kansas City Fed’s YouTube page, so the public can watch from home. Mr. Powell’s speech will be followed by a question-and-answer session.
While the Fed chair is the event’s headliner, he is not the only top central banker scheduled to appear at the conference. The slate of speakers includes Philip R. Lane from the European Central Bank, who will speak later on Thursday, and Andrew Bailey, head of the Bank of England, on Friday.
Turkey is facing its second currency crisis in less than two years. Economists are predicting a sharp downturn after the decline of the lira raised the specter of another round of soaring prices for imported goods like medicine and fuel. And international investors are alarmed by the financial maneuvering and flood of cheap credit that President Recep Tayyip Erdogan has used to prop up the lira and fuel economic growth.
Turkey’s economic fate has geopolitical ramifications. Recently, Turkish armed forces have behaved aggressively in the Mediterranean toward France and Greece, which are NATO allies. Analysts view the confrontations as an attempt by Mr. Erdogan to stir up nationalist sentiment and distract Turks from their money problems. His hold on power was shaken last year after his party lost control of the municipal government in Istanbul.
The sharp devaluation of the lira, which lost 7 percent of its value in August, has already led to higher prices for food and other basics, stirring resentment.
“Everything is unbelievably expensive,” said Derya, a 41-year-old math teacher, who did not want to give her last name because she is a government employee. She said she was mixing more onions into her meatballs to make them go further. Because of the lira’s decline, she said while shopping at an Istanbul market, “we have gotten poorer.”
The government has pressured banks to lend more, helping to prop up consumer spending but also feeding inflation, which is at an annual rate of almost 12 percent. The declining buying power of the lira is one reason it has been losing value against other currencies. In addition, many foreign investors lost faith in Turkey during the last crisis, in 2018, meaning there is little demand for lira assets.