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Credit…Liam Doyle for The New York Times
New claims for unemployment dropped last week, the government reported on Thursday, fueling renewed optimism in the staying power of the economic rebound.
A total of 709,000 workers filed first-time claims for state unemployment benefits in the week that ended March 6, 47,000 lower than the week before, the Labor Department said. In addition, there were 478,000 new claims for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits, an increase of 42,000.
Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 712,000.
New claims for state unemployment benefits had been drifting lower in recent weeks, as restrictions across the country have begun to lift — a trend that many economists expect will continue.
“The pieces are falling into place for a more substantial improvement in the labor market,” said Sarah House, a senior economist at Wells Fargo.
The Labor Department reported last week that employers added 379,000 jobs in February, an unexpectedly robust number that reinforced confidence in the strength of the economic recovery roughly one year into the pandemic-induced downturn. The gains came largely in the hard-hit leisure and hospitality industries.
Although initial jobless claims have fallen significantly since last spring, the economy has a long way to go until it reaches pre-pandemic levels. All told, there are about 9.5 million fewer jobs than there were a year ago. More than four million people have dropped out of the labor force, a group not included in the most widely cited unemployment rate.
“We’re still not yet at the phase of the recovery where we’re seeing the floodgates open up,” said Daniel Zhao, senior economist with the career site Glassdoor. “I don’t think it’s quite fair to call what we’ve done so far ‘reopening’ because there’s still a lot of people who are out of work and a lot of businesses that are closed.”
But as vaccination rates climb, the weather warms up and more government help arrives, via President Biden’s $1.9 trillion relief plan, many economists expect a vibrant economic resurgence.
“We’re seeing a huge pickup in hiring,” said Julia Pollak, a labor economist with the employment site ZipRecruiter. “I think for many employers, it’s becoming real, and for many job seekers it is as well.”
Credit…Michael Probst/Associated Press
The European Central Bank said Thursday it would step up its purchases of government and corporate bonds in the months to come in an effort to make sure that credit in the eurozone remained cheap.
The bank’s Governing Council said that it would not raise the total size of the purchases above the amount already planned, but it would buy bonds “at a significantly higher pace than during the first months of this year.”
The bank had earlier allocated 1.85 billion euros, or $2.2 billion, to fight the effects of the pandemic and keep borrowing costs low. That sum remains unchanged, but the bank will now spend the money at a faster pace.
The action announced on Thursday sends a strong signal to financial markets, which have been testing the central bank’s commitment to keep lending costs low in the eurozone while governments, corporations and individuals struggle through the pandemic.
Interest rates have been rising because investors, worried that inflation could pick up as economies around the world recover, have been less willing to buy bonds at the same exceptionally low rates as before.
Soon after the announcement, yields on 10-year German government bonds fell four basis points, from about minus 0.32 percent to minus 0.36 percent. That is still higher than earlier this year, when they were minus 0.6 percent.
Christine Lagarde, the bank’s president, promised in January to maintain favorable lending conditions. Easy credit, she said, “will support consumer spending, it will support investment spending, and ultimately it will help achieve our mandate of price stability.”
Bond yields feed into the broader economy because they set a benchmark for the rates that businesses pay for commercial loans and that individuals pay for mortgages and car loans.
“Yields in real or nominal terms were never lower than they are today before mid-2019,” Carl Weinberg, chief economist at High Frequency Economics in Stony Field, N.Y., said in a note ahead of Thursday’s decision. “By any conceivable metric, interest rates are indeed supporting bank lending and economic recovery, and that will continue to be the case for a while.”
The Biden administration will not enforce two Trump-era rules involving retirement plans, including one that effectively discouraged administrators for those plans from choosing investments based on environmental, social and governance considerations, the Labor Department said on Wednesday.
The second rule required retirement plan administrators — who serve as fiduciaries and must act solely in the interest of plan participants — to consider a complex list of principles before casting proxy votes on shareholder proposals, which may have discouraged plans from voting altogether. If fiduciaries decided to vote, and the rule makes clear that isn’t required, they must only support causes and goals in the plan’s financial interest.
Both regulations, which were finalized by the Trump administration late last year and took effect in January, will be rewritten and then formally proposed in the months ahead.
“These rules have created a perception that fiduciaries are at risk if they include any environmental, social and governance factors in the financial evaluation of plan investments,” Ali Khawar, principal deputy assistant secretary at the department’s Employee Benefits Security Administration, said in a statement. The rules also made it seem as if retirement plan sponsors had to have “special justifications for even ordinary exercises of shareholder rights,” Mr. Khawar said.
The Labor Department had already met with a variety of stakeholders on these issues, including asset managers, labor groups, plan sponsors and consumer advocates, Mr. Khawar said in an interview. And coming away from those meetings, he said it appeared that the rules had a “chilling effect” on using so-called E.S.G. factors in investment decisions and exercising their shareholder rights.
“In a number of instances, even when they were engaged in the kinds of activities that these rules were supposed to explicitly allow, there was a tremendous concern whether they can engage in those activities,” he said.
The agency plans to continue these discussions as it formulates new rules, and will update its website as more information became available, Mr. Khawar said.
Credit…Pool photo by Greg Nash
Congress will take up antitrust issues in full force this week, holding the first in a series of hearings about the power of Big Tech and corporate concentration across the economy.
At 10 a.m. on Thursday, the Senate antitrust subcommittee will examine modernizing century-old antitrust laws. Senator Amy Klobuchar, the Minnesota Democrat and chairwoman of the subcommittee, is expected to start with a broad survey of economic problems. The committee has called witnesses from academia, a corporate law firm and nonprofit think tanks.
“I want to start big and talk about consolidation across so many industries,” Ms. Klobuchar said in an interview. She said she also planned to outline specific problems, including the behavior of tech companies like Google and Facebook, which have gobbled up competition and have also threatened to leave Australia because of regulations that would force them to pay publishers more for their content.
“Tech competition disrupts things and we don’t want less disruption, we want more disruption and disrupters,” Ms. Klobuchar said.
On Friday, the House antitrust subcommittee will hold a hearing on how online platforms have harmed journalism and newsrooms. Witnesses in that hearing will include leading lobbyists for the broadcast and newspaper industries as well as Brad Smith, the president of Microsoft.
Representative David Cicilline, the Democratic chairman of the committee, and Representative Ken Buck, the Republican ranking member, joined numerous other lawmakers on Wednesday in introducing a bill called the Journalism Competition and Preservation Act. The bill would allow small news organizations to band together to collectively bargain for fees from online platforms that host their news. A similar law in Australia recently set off a battle between the Australian government and Google and Facebook.
Mr. Smith of Microsoft has recently come to support publishers who want to negotiate as a group. He said recently that the spate of disinformation around the U.S. election and subsequent Capitol riots highlighted the importance of preserving news organizations — particularly local news — while misinformation is spread via online platforms like Facebook and Google.
Credit…Ilvy Njiokiktjien for The New York Times
General Electric said it planned to build the football-field-long blades for its new offshore wind turbines at a plant in northeastern England.
The new factory will be in the Teesside region, an area that was recently named by the British government as a so-called freeport, with tax benefits and other business incentives. The plant will open in 2023 and create 750 jobs, according to a statement from G.E. late Wednesday.
Ben Houchen, the Tees Valley mayor, is working to rejuvenate the region by attracting investment in clean energy, including offshore wind power and a carbon-capture development. The new plant will produce blades for a large wind farm called Dogger Bank offshore in the North Sea.
Although Britain has become the world’s largest market for offshore wind turbines, some critics point out that most of the turbines are manufactured elsewhere, including Denmark and Germany. Blade factories are eagerly sought by local authorities, because they employ large numbers of people.
The blades, which will be about 350 feet long, will go on top of G.E.’s Haliade-X turbines, a prototype of which is being tested in Rotterdam, the Netherlands. The new turbine has already set off a race among manufacturers to build bigger machines.
Credit…Cristobal Herrera-Ulashkevich/EPA, via Shutterstock
Adam Aron, the chief executive and president of AMC Entertainment, the world’s largest theater chain, called the past year “the most challenging market conditions in the 100-year history of the company,” when presenting year-end earnings on Wednesday that included the loss of $4.6 billion.
Yet Mr. Aron struck an optimistic note about his company’s outlook for the year ahead based on the reduction in coronavirus cases, the reopening of theaters and the slate of blockbuster movies set to arrive beginning in May. He pointed specifically to Disney’s “Black Widow,” Universal’s “F9” and Paramount’s “Top Gun: Maverick.”
He added that “the real salvation” of AMC would be the jump in vaccinations both domestically and around the world.
“The most important person in the entire movie business,” Mr. Aron said, is not employed by “a studio nor any movie theater circuit,” but is Albert Bourla, the chief executive of Pfizer.
“He and his colleagues and those of Moderna and J&J have given us our newfound fortitude,” he added.
AMC lost $946 million in the quarter ending Dec. 31, even as theaters started to open back up after being closed for months.
At year’s end, 78 percent of the company’s U.S. operations had reopened with limited seating capacity. Internationally, 90 percent of the company’s theaters resumed operating in October, only to have to close again in the fourth quarter owing to a resurgence of the virus.
AMC said it shut down 60 low-performing theaters in 2020: 48 in the United States and 12 internationally. It also spent the year renegotiating its terms with studios, specifically Universal and Warner Bros., as they sent more films to their streaming platforms with theaters closed.
“Over the past several years, AMC has indicated that it is willing to be the most experimental movie circuit around with respect to window strategies,” Mr. Aron said, adding that the deals have to be good for AMC shareholders. “I continue to be optimistic that having been partners for a century, we can adjust our business relationships so they support both streaming and theatrical releases and do so, not at our expense.”
Wall Street’s rally extended to a third day, and global markets were higher, as investors on Thursday were relieved by relatively modest inflation data in the United States and looking forward to the stimulus coming from President Biden’s $1.9 trillion pandemic relief bill, which won final congressional approval on Wednesday.
The enormous piece of spending, one of the largest infusions of federal aid since the Great Depression, will provide another round of direct payments to millions of American, extend federal jobless benefits and provide millions for small businesses, state and local governments and schools. Mr. Biden is expected to sign it Friday.
The S&P 500 rose 0.7 percent in early trading, while the Nasdaq composite climbed more than 1.5 percent.
European markets were mostly higher, with the Stoxx Europe 600 up 0.4 percent. Asian markets ended the day higher, with the Nikkei in Japan up 0.6 percent and the Shanghai Composite in China gaining 2.4 percent.
Inflation and Bonds
The Labor Department released data on Wednesday that showed inflation remained tame: Excluding the volatile food and energy categories, the Consumer Price Index rose 0.1 percent in February. The news seemed to calm some concerns about an overheating economy, and on Thursday the 10-year Treasury yield was lower.
The European Central Bank said Thursday it would step up its purchases of government and corporate bonds in the months to come in an effort to make sure that credit in the eurozone remained cheap, sending a strong signal to financial markets.
Oil futures rose slightly. Brent crude, the global benchmark, was up 0.8 percent after briefly touching $69 a barrel. West Texas Intermediate crude, the U.S. benchmark, gained 1.1 percent, at about $65.20 a barrel.