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Unemployment Claims Rise as Job Rebound Loses Momentum

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Six months into the pandemic-induced economic crisis, the layoffs keep coming.

About 825,000 people filed for state unemployment benefits last week, the Labor Department said Thursday. That figure, which does not reflect seasonal adjustments, is far below the more than six million a week who were filing as layoffs peaked in the spring, but higher than in the worst weeks of many past recessions. Millions are relying on unemployment benefits to meet their basic expenses.

Worse, progress is slowing: Applications for state jobless benefits rose last week, and have been falling only slowly since midsummer.

“Compared to April, they’re trending down, but if you’re comparing to the pre-Covid era they are still so high,” said AnnElizabeth Konkel, an economist for the career site Indeed.

The recent loss of momentum is particularly worrisome, Ms. Konkel said, because restaurants and other businesses that had shifted operations outdoors are likely to begin laying off workers again as colder weather hits Northern states in the weeks ahead.

“We’re losing steam, which is definitely not good heading into the winter,” she said.

In addition to the filings for state jobless benefits, the Labor Department recorded 630,000 initial filings for Pandemic Unemployment Assistance, an emergency federal program that covers freelancers, self-employed workers and others left out of the regular unemployment system. That program has been plagued by fraud and double-counting, and many economists say the data is unreliable.

Credit…Akasha Rabut for The New York Times
Credit…Akasha Rabut for The New York Times

In recent weeks, California and Arizona in particular have reported a flood of fraudulent claims. On Saturday, California announced it would stop accepting applications for unemployment benefits for two weeks while it took steps to cut down on fraud and address other issues.

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The data released Thursday suggests that even before that shutdown, California had begun to get its fraud problem under control. The state reported just under 100,000 applications under the program last week, down from more than 200,000 the week before, and more than 400,000 per week in late August and early September.

But for Californians like Stephanie Santiful, the shutdown is a source of frustration and uncertainty.

Ms. Santiful, 37, lost her job as a university librarian in March. After a few weeks, she began receiving $450 a week in state unemployment benefits, plus a $600 weekly supplement from the federal government while that program lasted. It was a bit less than what she had earned while working, but enough to pay her bills.

The supplement expired at the end of July, and last week she reached the end of her regular state benefits. Ms. Santiful should qualify for an additional 13 weeks of benefits under an emergency program created by Congress in March, but she has to apply for them first — and with California’s application system paused, it isn’t clear whether she will be able to do so.

She also has yet to receive the $300 a week in extra benefits that President Trump authorized last month, and doesn’t know when she will get it.

“It’s scary,” said Ms. Santiful, who lives in Lancaster. “It’s scary to not know what to expect. It’s scary not knowing if the country decides, ‘OK, that’s been enough, you’re on your own.’”

ImageStephanie Santiful, whose California unemployment benefits expired, is eligible for federal relief but doesn’t know when the state will let her apply for it.
Credit…Alexis Hunley for The New York Times

Ms. Santiful, who has two teenage sons, said she had saved enough to cover rent for October. But after that, she isn’t sure what she’ll do. She said she was considering returning to Virginia, her home state, but doesn’t know how she would afford that.

“I can’t even move back home because I don’t have the money,” she said.

The report on Thursday marked a grim milestone: 27 weeks since the flood of layoffs began in mid-March. In most states, workers qualify for a maximum of 26 weeks of unemployment payments, meaning that workers who lost their jobs early in the crisis have begun to see their benefits expire.

An emergency program established by Congress in March offers an additional 13 weeks of benefits for most workers. And a separate federal program will provide extended benefits after that if the unemployment rate remains elevated. But experts on the unemployment system said there was a risk that benefits for some workers would lapse at least temporarily.

In the meantime, unemployed workers are trying to make ends meet without the extra assistance that helped them earlier in the crisis, particularly the $600 weekly federal supplement.

The $300-a-week stopgap replacement that Mr. Trump ordered, Lost Wages Assistance, was drawn from federal disaster funds sufficient for only six weeks of payments. Because the program is retroactive to the week that ended Aug. 1, it lasted through the first week of September in most states.

Confusingly, many workers have yet to begin receiving payments — or are just starting to get them — because many states took weeks to get the program running. So workers in some states will receive a lump sum to cover retroactive benefits, and nothing more.

Tyler Lindsay worked as an event sales manager at Hornblower Cruises for four years before he was furloughed on March 17, when the pandemic hit and cruise operations ground to a halt. He was permanently laid off on Aug. 17, after the cruise line decided to suspend New York operations at least through the spring.

Credit…Sean Pressley for The New York Times

Mr. Lindsay, 47, received $900 in a lump sum last week from the Lost Wages Assistance program. He expects to receive $900 more this week.

That money, which includes retroactive payments, will go toward the roughly $1,000 in October rent and $250 in utilities for his apartment in the Prospect Lefferts Gardens neighborhood of Brooklyn. But the program’s funding has ended, so Mr. Lindsay will have to look for longer-term solutions.

“Every little bit helps,” he said. “But it’s still not enough.”

After he was furloughed, Mr. Lindsay began receiving $504 a week in New York State benefits, plus the $600 weekly federal supplement. But since the supplement ended in late July, he has used $2,000 of his savings since the pandemic hit to pay for rent and buy groceries, while cutting back on expenses.

“When the $600 was still here, I still felt comfortable ordering takeout or meeting a friend out to get drinks,” he said. “But now I’m a lot more conscious of not being able to do that.”

Mr. Lindsay said he had lost hope of employment in the event industry in New York and was considering moving somewhere like Florida, where he thinks he would have more opportunity to find work at weddings and parties because virus-related restrictions are looser. But the idea makes him nervous.

“Do I want to risk my life and throw myself into a situation where there aren’t proper Covid practices?” Mr. Lindsay asked. “But at the same time, things don’t appear to be getting better here in New York City financially. So it’s a predicament.”

Gillian Friedman contributed reporting.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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