Increasing Covid-19 cases are taking a heavy toll on economic activity and wrecking the labor market, even as new vaccines offer a ray of hope for next year.
The number of Americans filing initial unemployment insurance claims remained high last week, the Labor Department reported Thursday. After falling earlier in the fall, claims have risen and remain at levels that overshadow the pace of past recessions.
There were 935,000 new claims for government benefits, compared to 956,000 the week before, while 455,000 had applied for pandemic unemployment assistance, a government-funded program for part-time workers, the self-employed, and others who are not normally eligible for unemployment benefits.
On a seasonally adjusted basis, the number of new state claims was 885,000, an increase of 23,000 from the previous week.
Consumer caution, coupled with new restrictions on business activities such as indoor dining, has hit the hospitality industry, lodging, airlines and other service businesses. The debut of a coronavirus vaccine this week offers the prospect of relief, but until mass vaccinations begin next year, the economy will remain under pressure.
“There is an underlying weakness in the labor market that has occurred in recent weeks and is linked to the pandemic,” said Gus Faucher, chief economist at PNC Financial Services. “The number of caseloads increases, the consumer’s reluctance to spend and these are government restrictions.”
At the end of November, more than 20 million workers were collecting unemployment benefits under state or federal programs, according to data from the Labor Department.
With the weakening economy as a backdrop, Republican and Democratic leaders in Congress continued talks on a new pandemic bill on Wednesday, something economists have warned is too late. If no action is taken, two major programs for unemployed workers will expire this month, limiting benefits to millions.
The data released Wednesday showed a 1.1 percent drop in retail sales in November, a disappointing start to the pivotal holiday season. Mr. Faucher expects economic growth to be weak in the coming months, before picking up later in 2021.
“Until we get a lot of people vaccinated, the economy will go through a tough test,” he said. “I don’t know if we’ll see outright contraction or job losses, but the pace of improvement will slow down significantly.”
The Bank of England, which has battled not only a pandemic but also the threat of a disruptive exit from the European Union, made no changes to its monetary policy on Thursday amid signs that both threats could abate.
The central bank left its benchmark interest rate at 0.1 percent and did not increase its government bond purchases. In November, at its last meeting, the bank’s Monetary Policy Committee expanded its bond purchases by £ 150 billion, a way to keep market interest rates low. The bank said Thursday it would continue to aim for total asset purchases of £ 895 billion, or $ 1.2 trillion.
The bank also extended for six months a program that allows commercial banks to borrow money at or near the reference rate, if they route the money to small and medium-sized businesses.
Successful development of coronavirus vaccines “is likely to mitigate downside risks to Covid’s economic outlook,” the Monetary Policy Committee said in a statement. But the commission also said growth would be “slightly weaker” than policymakers expected in November due to tighter lockdowns.
Negotiators for Britain and the European Union continued to meet in Brussels on Thursday, and there were indications that they had narrowed their differences, potentially preventing a no-deal Brexit that would be bad for both economies, but especially Britain.
In an example of the potential damage, German automaker BMW warned that it would have to significantly increase prices for cars sold in Britain if there was no deal. Nicolas Peter, the company’s chief financial officer, told German media on Wednesday that due to import and export tariffs, BMW should also increase the price of British-made minis sold in Europe.
Widespread confusion remains about a key element of the plan to protect some of America’s most vulnerable from the coronavirus, Rebecca Robbins and Jessica Silver-Greenberg report for The New York Times: How Nursing Homes Get Permission to Vaccinate Residents Who Have That not be. able to make their own medical decisions.
Some states are starting vaccinations in their nursing homes this week, but a wider nationwide effort will kick off in earnest Monday as CFS and Walgreens workers arrive at tens of thousands of nursing and care homes to vaccinate staff and residents.
A CFS director said legal representatives of such residents will be able to give consent to nursing homes electronically or over the phone, but officials from several major nursing home chains said they were not aware of this.
If residents or their representatives have not given consent before CVS or Walgreens employees show up, it’s not clear if and when they will have another chance to be vaccinated.
There is no federal requirement for people to give consent before being vaccinated, but it is standard practice and is often required for billing purposes. States have different requirements about how medical consent can be given and what information must be provided to the person giving consent. Advice from the Centers for Disease Control and Prevention is that residents or their representatives should receive a fact sheet about the coronavirus vaccine and then give permission to receive it.
Executives from CFS and Walgreens said in interviews that they had been planning the vaccination campaign for months and were confident it would work. “If there are any concerns or challenges, we are certainly open to working with facilities to try to minimize any disruption,” said Rick Gates, a Walgreens manager who leads the company’s planning.