Fed officials sift through tea leaves of weak U.S. jobs report

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – Federal Reserve officials grappled on Tuesday with April’s surprisingly weak employment growth, maintaining faith in the U.S. economic rebound but acknowledging the pace of the jobs recovery may prove choppier than anticipated.

The United States added 266,000 jobs last month, about a quarter of the gain penciled in by economists, including Fed officials themselves, in what had been anticipated to be the start of a steady run of strong job growth.

The April report instead raised a broad set of questions about the complicated interplay among peoples’ decisions about whether to work during the ongoing coronavirus pandemic, constraints stemming from the lack of child care and closed schools, the slowing pace of COVID-19 vaccinations, global supply bottlenecks for critical goods like semiconductors, and the enhanced federal unemployment benefits that may be encouraging some potential workers to stay home.

In contrast to the low number of jobs created in April, job openings as of the end of March hit a record 8.1 million, narrowing the wedge with the roughly 9.8 million people still unemployed.

“What the data suggests, and what I hear anecdotally, is that labor demand and labor supply are both on the path to recovery but they are recovering at different paces and there may be friction,” Fed Governor Lael Brainard told the Society for Advancing Business Writing and Editing (SABEW).

“There are still concerns over contracting the virus, the need to take public transportation,” she said, while many parents are waiting for schools to reopen.

“I do expect to see good improvement on people wanting to go to work and able to work,” Brainard added. “We are just seeing it in fits and starts,” a fact she said validated the U.S. central bank’s “patient” promise to leave crisis-level interest rates and bond-buying in place until the recovery is more complete.

In separate appearances, Cleveland Fed President Loretta Mester, Philadelphia Fed President Patrick Harker, and San Francisco Fed President Mary Daly laid out similar arguments, and noted that much may hinge on whether larger numbers of Americans get vaccinated so that people overall become more comfortable in close-contact jobs and activities.

‘HARD CHOICES’

The April jobs report has kindled intense debate in Washington about where the recovery stands and whether current federal policy is stifling aspects of it.

The economy is poised for its strongest growth since the early 1980s, jobs boards are bulging with open positions, and the number of new daily coronavirus infections has recently ebbed to levels not seen since the start of the pandemic.

Businesses, even the smaller enterprises that had to be nursed through the pandemic with federal help, now complain those same benefits are allowing workers to stay home.

Brainard, however, noted that about two-thirds of school-age kids were still not back in classrooms on a full-time basis, while only about a quarter of those aged 18 to 64 – the core of the U.S. work force – are fully vaccinated.

The decision by the Biden administration and Congress earlier this year to extend a weekly $300 federal unemployment benefit until September has become a particular point of contention, with Republican governors in several states moving to halt the payments.

Fed officials, however, have largely discounted the impact of the extra payments on workers’ willingness to seek jobs, arguing that it isn’t the benefit as much as health risks and other problems that are at play. At the start of the pandemic, federal benefits were put in place largely so people would not have to venture out to jobs that might expose them to illness and allow them to spread it further.

“It is true that with the extension of the unemployment benefits people are in a financial position so that they can make those hard choices, about whether they feel comfortable reentering or not,” Mester said on Yahoo Finance.

The pace of the labor market rebound has a direct bearing on how the Fed intends to set monetary policy.

In particular, the Fed has said it would not change its current $120 billion in monthly purchases of government securities until there was “substantial further progress” in reaching maximum employment.

Slower job growth pushes that moment further into the future even as concerns increase that the continuing loose monetary policy may fuel inflation, or drive up asset prices that will eventually return to earth.

New consumer price data this week is expected to stoke that debate as prices for staple goods and commodities like lumber for home projects move higher.

Fed officials, however, say they expect the pressure on prices to also ease over time, just as the difficulties in the labor market will be resolved.

“To the extent that supply chain congestion and other reopening frictions are transitory, they are unlikely to generate persistently higher inflation on their own,” Brainard said, noting that some of the very forces that might generate higher prices now – a surge in demand as people get back to normal activity, for example – won’t be repeated.

Government fiscal spending is also expected to fade next year.

“Remaining patient through the transitory surge associated with reopening will help ensure that the underlying economic momentum that will be needed to reach our goals as some current tailwinds shift to headwinds is not curtailed by a premature tightening of financial conditions,” she said.

(Reporting by Howard Schneider and Ann Saphir; Editing by Paul Simao)

Schools shut, travel curbed as world races to fight coronavirus

By Colin Packham and Parisa Hafezi

SYDNEY/DUBAI (Reuters) – Governments battling coronavirus epidemics from Iran to Australia shut schools, canceled big events and stocked up on medical supplies on Thursday in a race to contain the outbreak’s rapid global spread.

For the first time, new infections reported around the world surpassed those in mainland China, where the flu-like disease emerged two months ago from an illegal wildlife market but is on the decline after an aggressive containment campaign.

In Japan, where cases rose to 200, there was particular concern after a female tour bus guide tested positive for a second time – one of very few worldwide to do so.

Tokyo has halted big gatherings and sports events for two weeks, and is closing schools early for the spring break. But it still plans to go ahead with the 2020 Olympics, whose cancellation or relocation would be a massive blow for Japan.

The coronavirus has mainly battered China, causing 78,596 cases and 2,746 deaths. But it has spread to another 44 countries with 3,246 cases and 51 deaths reported.

Though meeting the dictionary definition of a pandemic – widespread contagion across a large region – the World Health Organization (WHO) has so far held back from using that term.

“This virus has pandemic potential,” WHO chief Tedros Adhanom Ghebreyesus told reporters in Geneva. “This is not a time for fear. This is a time for taking action to prevent infection and save lives no

MACRON: CRISIS COMING

Australian Prime Minister Scott Morrison ordered hospitals to ensure sufficient medical supplies, protective gear and staff. U.S. President Donald Trump put his vice president, Mike Pence, in charge of America’s response, while France’s President Emmanuel Macron rallied the nation.

“We have a crisis before us. An epidemic is on its way,” Macron said at a Paris hospital where a 60-year-old Frenchman this week became the second person to die from the coronavirus in France.

Germany, too, has warned of an impending endemic. And Greece, which is a gateway for refugees from the Middle East and beyond, announced tighter border controls, with particular attention on islands used by migrants.

Spooked by the impact on China, the heart of corporate supply chains, and the increasing effect on other countries, stocks sank deeper into the red and oil prices fell.

Global markets have dropped for six straight days, wiping out more than $3.6 trillion in value.

“All of us are very worried about what is currently happening with respect to the spread of the coronavirus,” European Central Bank (ECB) executive board member Isabel Schnabel said during a speech in London.

Klaas Knot, seen as one the ECB’s most hawkish members, also expressed concern but noted that after the 2002-03 SARS epidemic, also originating in China, its economy then rebounded to grow from the world’s sixth to its second biggest now.

A rash of countries have had their first cases in recent days, the latest being Denmark with a man back from a ski holiday in Italy, and Estonia with someone returning from Iran.

There is no cure for the virus that can lead to pneumonia, and a vaccine may take up to 18 months to develop.

New cases in South Korea took its total to 1,261 with 12 deaths, while Europe’s hotspot Italy had 453 infections and 12 deaths, and Iran reported 245 cases and 26 fatalities.

In Singapore, authorities said a 12-year-old student at the elite Raffles Institution school was among the three new cases confirmed on Thursday, taking the city state’s tally of infections to 96.

MISINFORMATION ‘EPIDEMIC’

Urging people to avoid unnecessary travel, Tehran extended its closure of cinemas, cultural events and conferences for another week. Iran’s outbreak has added to the isolation of a nation already under U.S. sanctions.

Desperate to stave off a probable recession, Italy warned that the “epidemic of misleading information” could do worse harm than the virus itself.

The coronavirus has played havoc with global aviation and tourism as airlines cancel flights, countries ban visitors from hot spots and nervous passengers put off travel.

The United States is managing 59 cases – most Americans repatriated from a cruise ship quarantined in Japan where almost 700 cases developed. But Trump said the risk was “very low” in the United States which was “very, very ready”.

Chinese authorities said the number of new deaths stood at 29 on Thursday, its lowest daily tally since Jan. 28. There were just 433 new cases in mainland China over the previous day, compared to 586 in nations and territories elsewhere.

 

(Reporting by Ryan Woo, Yilei Sun and Lusha Zhang in Beijing, Daniel Leussink in Tokyo, Aradhana Aravindan in Singapore, Parisa Hafez in Dubai, Stephanie Nebehay in Geneva, Sudip Kar-Gupta and Michel Rose in Paris, Crispian Balmer and Gavin Jones in Rome; Writing by Andrew Cawthorne; Editing by Nick Macfie)

Colorado trooper killed as ‘Bomb Cyclone’ unleashes snow, high winds

A policeman talks to a driver as snow clogs the roads in Lone Tree, Colorado, U.S. in this March 13, 2019 handout photo. City of Lone Tree, Colo./Handout via REUTERS

By Keith Coffman

DENVER (Reuters) – A late-winter blizzard slammed U.S. Rocky Mountain and Plains states on Wednesday, unleashing a “bomb cyclone” of high winds and drifting snow that stranded motorists, canceled more than 1,300 airline flights and was blamed for the death of a Colorado state trooper.

Colorado Governor Jared Polis declared a state of emergency due to the storm and said he had activated the state National Guard to assist in search and rescue operations.

Corporal Daniel Groves, 52, of the Colorado State Patrol is pictured in this undated handout photo obtained by Reuters March 13, 2019. Colorado State Police/Handout via REUTERS

Corporal Daniel Groves, 52, of the Colorado State Patrol is pictured in this undated handout photo obtained by Reuters March 13, 2019. Colorado State Police/Handout via REUTERS

The National Weather Service issued blizzard warnings for parts of Colorado, Wyoming, Nebraska and the Dakotas as schools and businesses were closed and local authorities urged residents to hunker down.

Meteorologists referred to the storm as a “bomb cyclone,” a winter hurricane that forms when the barometric pressure drops 24 millibars in 24 hours.

“So far, we have received 110 traffic crash reports and #Denver remains on #AccidentAlert,” the Denver Police Department said on Twitter.

“If you absolutely have to head out, please be cautious- it’s still #snowgoing out there. Turn your lights on, set the wipers on high; don’t forget the extra stopping distance. #BombCyclone”

The Colorado State Patrol said one of its troopers, Corporal Daniel Groves, was struck by a car that veered out of control on Interstate 76 and he died of his injuries a short time later at Platte Valley Medical Center in Brighton.

At the time, Groves, 52, was on the scene of another accident in which a vehicle had slid off the roadway, the state patrol said. It added that “high speed in poor driving conditions” was being investigated in connection with the crash that caused his death.

A general view of the blizzard in Greeley, Colorado, U.S. March 13, 2019 in this picture obtained from social media. Mandatory credit TWITTER @PHOTOWILLG/via REUTERS

A general view of the blizzard in Greeley, Colorado, U.S. March 13, 2019 in this picture obtained from social media. Mandatory credit TWITTER @PHOTOWILLG/via REUTERS

FLIGHTS DELAYED, CANCELED

All six runways at Denver International Airport were shuttered, along with the main road into the airport due to drifting, blowing snow. An airport spokesman said 1,339 flights had been canceled as of mid-afternoon. Colorado Springs Municipal Airport canceled all incoming flights.

All school districts in the seven-county Denver metropolitan were closed, along with most city and state government offices and many businesses.

Officials in El Paso County, Colorado, said some 1,100 motorists were stranded on Interstate 25 near Colorado Springs.

Utility company Xcel Energy said about 130,000 commercial and residential customers in Colorado were without power due to high winds and wet heavy snow.

“Limited visibility has affected our ability to respond,” Xcel Energy spokesman Mark Stutz said, adding it was unclear when power would be restored.

The police department in Northglenn, Colorado, tweeted a picture of a large tree that fell on a home, breaking through the roof. It was not immediately clear if anyone was hurt.

Interstate 70 was closed east of Denver to the Kansas state line and sections of Interstate 25 were also shut down, according to Colorado Department of Transportation.

“They typically do get strong systems this time of the year in that part of the country, but this one is maybe a notch stronger than what you typically see,” said meteorologist Marc Chenard of the weather service’s Weather Prediction Center in College Park, Maryland.

Forecasters said they expect winds of up to 70 miles per hour (110 kph) to sweep across a wide area of states to the south, including New Mexico and parts of Texas, Oklahoma and Kansas.

“Pretty much through much of the Plains there’s going to be a threat for potential power outage issues,” Chenard said.

More than 100,000 electric power customers in the Dallas-Fort Worth area were left in the dark early on Wednesday after a line of rain squalls associated with the system moved through the area.

The storm was also expected to bring heavy rain to areas of eastern Nebraska, Iowa, Wisconsin and Minnesota that already have a good deal of snow on the ground, raising the threat of river flooding, the weather service said.

The storm system is expected to weaken by Thursday as it moves over the Tennessee River Valley, bringing mostly rain from Michigan southward to the Gulf Coast and some remaining snow only in the far northern parts of the country, the weather service said.

(This story corrects name of Colorado governor in second paragraph)

(Reporting by Keith Coffman in Denver; additional reporting Peter Szekely in New York, Brendan O’Brien in Milwaukee and Dan Whitcomb in Los Angeles; Writing by Dan Whitcomb in Los Angeles; Editing by Bill Tarrant and Sandra Maler)