Kudlow sees single-digit unemployment in August, ‘V’ recovery

(Reuters) – White House economic adviser Larry Kudlow on Thursday said he expects the U.S. unemployment rate to return to single-digit levels as early as this month and growth in the third quarter should be 20% or more as the economy recovers from the recession triggered by the coronavirus pandemic.

“The key point that I would make is the economy is rebounding, it looks like a V-shaped recovery and the recent news now is even better than it was a month ago,” Kudlow said in a virtual appearance at a conference hosted by the Council of the Americas.

(Reporting By Jonnelle Marte and Dan Burns; Editing by Chizu Nomiyama)

Coronavirus child care pinch in U.S. poses threat to economic gains of working women

By Jonnelle Marte and Rachel Dissell

CLEVELAND (Reuters) – Most days, Zora Pannell works from her dining room table, sitting in front of her computer, turning off the video on Zoom calls to nurse her one-year-old daughter, Savannah.

Pannell has balanced working from home and caring for her daughter and son Timothy, aged 2, since March when she started a new job as a manager for a language services company the same week that Ohio issued a “stay at home” order to stop the spread of the coronavirus.

Working from home is an exhausting daily juggle but she’s more worried about being told it’s time to return to the office. Her husband cannot watch the children during the day because he has a job at a local steel mill and the couple have been unable to find a daycare center they deemed safe and affordable close to their Shaker Heights apartment on the eastern fringe of Cleveland.

“I’ve already felt penalized for being a working mother,” said Pannell, 30, who is worried she would have to quit if she is not allowed to keep working from home. “Now it’s like I’m in purgatory.”

The pandemic upended child care plans for many parents in the United States, forcing them – particularly mothers – to grapple with tough choices that are only becoming more difficult as states push return-to-work policies to try to revive the battered economy.

Do they hunt for expensive and hard-to-find child care that could expose their families to COVID-19, which is still raging across much of the country? Or do they scale back on work, or even quit, threatening their financial stability?

The barriers risk stalling or reversing the economic gains of recent years made by working women, who are more likely to take a career hit than men when they are unable to find child care, studies show.

A survey by Northeastern University between May 10-June 22 found that 13% of working parents had to resign or reduce their work hours because of a lack of child care during the health crisis, with women impacted significantly more than men. In all, of those who said they had lost a job due to child care problems, 60% were women, the survey found.

“If women don’t have child care, they can’t go back to work,” said Karen Schulman, Child Care and Early Learning Research Director for the National Women’s Law Center. If that doesn’t happen, “you end up creating a system that is going to result in vast gender inequities”.

Prior to the pandemic, the labor force participation rate for women aged 25-54 touched 77% in February, rising from 73% in September 2015 and close to the peak reached in 2000, when the share of women in the labor force began to plateau, in part because of challenges accessing affordable child care, experts say.

LIMITED OPTIONS

Pressure looks certain to mount on families in the coming weeks, as various aid programs and protections that offered relief to jobless parents expire, including enhanced unemployment benefits, eviction moratoriums and a freeze on student loan payments.

“There’s this fragile, invisible thread holding the lives of our moms, holding the lives of our economy together,” said Chastity Lord, president and chief executive of the Jeremiah Program, a Minneapolis-based nonprofit organization that supports single mothers and their children.

Finding a way to broaden access to child care will be pivotal to helping the U.S. labor market heal from the economic devastation caused by the pandemic, with latest data showing the economy contracting an annualized 32.9% in the second quarter of 2020 and approximately one out of five workers claiming unemployment insurance in the week ending July 11.

Child care was already scarce before the coronavirus led to the shuttering of thousands of centers. More than half of all Americans lived in a child care “desert” as of 2018, defined by the Center for American Progress, a liberal nonprofit group in Washington, as an area with no licensed child care providers or less than one slot for every three children under five.

Now, in many states, care centers accept only limited numbers of children to prevent the virus from spreading. Additionally, families that relied on grandparents or other older relatives or neighbors must weigh up the risks of asking for their help again and perhaps exposing them to a disease that has proved especially deadly for the elderly.

Chantel Springer, 24, worked at Starbucks in Manhattan during the early months of the pandemic but has been on furlough since June, when the store cut back on staff to adjust to lower demand and social distancing requirements. Now that her unemployment benefits could shrink as low as $325 a week, Springer is making arrangements to get back to her job as a shift manager.

“I feel like I have to work,” said Springer, explaining that the reduced benefits would not be enough to cover the rent, food, diapers and other costs.

This month, Springer transferred to a store in Brooklyn so she could be closer to her apartment and her two-year-old. But finding someone to babysit her son is a challenge. Springer can no longer leave the toddler with her mother, who recently moved to take care of a disabled sister whose husband died from Covid-19. For now, she is looking to coordinate schedules with her son’s father, who has also returned to work at a retail store.

HOME ALONE

Under the CARES Act passed in late March, parents who lost access to child care because of the pandemic became eligible for unemployment benefits. But the process of qualifying for the program, which varies from state to state, became less clear cut as the school year ended and some day care centers began to re-open with limited capacity.

The Labor Department sought to clarify with guidance that parents should resort to their typical summer child care plans.

Many states, including New York, Missouri and Louisiana, allow parents to self-certify each week, under penalty of perjury, that their child care center was closed and that they met the requirements to continue receiving benefits. Other states, like California and Texas, make such decisions on a “case-by-case” basis.

While child care places are hard to find for toddlers, they are even scarcer for school-age children and many summer programs for this age-group went online, leaving parents facing a quandary.

Sarah Sapp is hatching plans to rig up an old cell phone for her 11-year-old son, Avery.

The 37-year-old waitress from North Olmsted, a western suburb of Cleveland, fears her son, who sometimes struggles to pay attention to instructions, isn’t quite mature enough to be left home alone while she serves food and drinks at a high-end tavern. But she feels she has little choice.

When Ohio initially ordered restaurants and bars to close in March, Sapp qualified for state unemployment. But when the state told people it was safe to return to work in May, she was informed that she would no longer be eligible. Sapp tried to sign her son up for a day camp at her local recreation center but it got canceled.

More problems are piling up on the horizon. Sapp’s school district has told parents they must choose between all online lessons or a hybrid of two days shortened days in school and three days at home when classes resume in September. Neither of these options would allow her to work her lunchtime shift.

“I feel stuck,” Sapp said. “There doesn’t seem to be a right choice no matter how I look at things.”

(Rachel Dissell is a contributing reporter with The Fuller Project, a global nonprofit newsroom reporting on issues that impact women.; Jonnelle Marte reported for this story from New York; Editing by Heather Timmons and Crispian Balmer)

U.S. job growth jumps; annual wage gain largest since 2009

People wait in line at a stand during the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth rebounded sharply in October and wages recorded their largest annual gain in 9-1/2 years, pointing to further labor market tightening that could encourage the Federal Reserve to raise interest rates again in December.

The Labor Department’s closely watched monthly employment report on Friday also showed the unemployment rate steady at a 49-year low of 3.7 percent as 711,000 people entered the labor force, in a sign of confidence in the jobs market.

Sustained labor market strength could ease fears about the economy’s health following weak housing data and stalling business spending. President Donald Trump cheered the robust report, which came less than a week before the midterm elections that will decide who controls the U.S. Congress.

“These are incredible numbers,” Trump tweeted.

Nonfarm payrolls increased by 250,000 jobs last month as employment in the leisure and hospitality sector bounced back after being held down by Hurricane Florence, which drenched North and South Carolina in mid-September.

There were also big gains in manufacturing, construction and professional and business services payrolls. Data for September was revised to show 118,000 jobs added instead of the previously reported 134,000.

Economists polled by Reuters had forecast payrolls increasing by 190,000 jobs in October and the unemployment rate unchanged at 3.7 percent. The Labor Department said Hurricane Michael, which struck the Florida Panhandle in mid-October, “had no discernible effect on the national employment and unemployment estimates for October.”

Average hourly earnings rose five cents, or 0.2 percent, in October after advancing 0.3 percent in September. That boosted the annual increase in wages to 3.1 percent, the biggest gain since April 2009, from 2.8 percent in September.

Employers also increased hours for workers last month. The average workweek increased to 34.5 hours from 34.4 hours in September.

“The report shows a booming U.S. economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year,” said David Kelly, chief global strategist at JPMorgan Funds in New York.

Strong annual wage growth mirrors other data published this week showing wages and salaries rising in the third quarter by the most since mid-2008. Hourly compensation also increased at a brisk pace in the third quarter.

Firming wages support views that inflation will hover around the Fed’s 2.0 percent target for a while. The personal consumption expenditures price index excluding the volatile food and energy components, which is the Fed’s preferred inflation measure, has increased by 2.0 percent for five straight months.

The Fed is not expected to raise rates at its policy meeting next week, but economists believe October’s strong labor market data could see the U.S. central bank signal an increase in December. The Fed raised borrowing costs in September for the third time this year.

U.S. stocks were trading mostly lower and the dollar was slightly weaker against a basket of currencies on Friday. Prices of U.S. Treasuries were lower.

WORKER SHORTAGE

Employers, scrambling to find qualified workers, are boosting wages. There are a record 7.14 million open jobs.

Online retail giant Amazon.com Inc announced last month that it would raise its minimum wage to $15 per hour for U.S. employees starting in November. Workers at United States Steel Corp are set to receive a hefty pay rise also.

Employment gains have averaged 218,000 jobs per month over the past three months, double the roughly 100,000 needed to keep up with growth in the working-age population.

That is seen supporting the economy through at least early 2019 when gross domestic product is expected to significantly slow as the stimulus from the White House’s $1.5 trillion tax cut package fades.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, increased two-tenths of a percentage point to 62.9 percent last month.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell to 7.4 percent last month from 7.5 percent in September. The employment-to-population ratio rose two-tenths of percentage point to 60.6 percent, the highest since January 2009.

Last month, employment in the leisure and hospitality sector increased by 42,000 jobs after being unchanged in September. Retail payrolls rose by only 2,400, likely restrained by layoffs related to Steinhoff’s Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp.

Construction companies hired 30,000 more workers in October. Jobs in the sector have been increasing despite weakness in the housing market. Government payrolls rose by 4,000 jobs in October.

Manufacturing employment increased by 32,000 jobs in October after adding 18,000 positions in September. Job gains in the sector, which accounts for about 12 percent of the U.S. economy, could slow after a survey on Thursday showed a measure of factory employment fell in October.

So far, manufacturing hiring does not appear to have been affected by the Trump administration’s protectionist trade policy, which has contributed to capacity constraints at factories. The United States is locked in a bitter trade war with China as well as tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

Despite the protectionist measures, the trade deficit continues to deteriorate. In a separate report on Friday, the Commerce Department said the trade gap increased 1.3 percent to $54.0 billion in September, widening for a fourth straight month.

(Reporting by Lucia Mutikani; Editing by Clive McKeef and Paul Simao)

U.S. jobless claims rise; continuing claims lowest since 1973

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson/File Photo

WASHINGTON (Reuters) – New applications for U.S. unemployment benefits increased more than expected last week, but the number of Americans on jobless rolls fell to its lowest level since 1973, pointing to tightening labor market conditions.

Initial claims for state unemployment benefits rose 24,000 to a seasonally adjusted 242,000 for the week ended March 31, the Labor Department said on Thursday. Data for the prior week were revised to show 3,000 more claims received than previously reported.

Economists polled by Reuters had forecast claims rising to 225,000 in the latest week. Last week’s increase likely reflected difficulties adjusting the data around moving holidays like Easter and school spring breaks.

The labor market is considered to be near or at full employment. The jobless rate is at a 17-year low of 4.1 percent, not too far from the Federal Reserve’s forecast of 3.8 percent by the end of this year.

The Labor Department said claims for Maine and Colorado were estimated last week. It also said claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal after the territories were devastated by Hurricanes Irma and Maria last year.

The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, rose 3,000 to 228,250 last week.

The claims data has no bearing on March’s employment report, which is scheduled for release on Friday. According to a Reuters survey of economists, nonfarm payrolls probably increased by 193,000 jobs in March. The unemployment rate is forecast falling one-tenth of a percentage point to 4.0 percent.

Economists are optimistic that tightening labor market conditions will start boosting wage growth in the second half of this year. That should help to support consumer spending, which slowed at the start of the year.

The claims report also showed the number of people receiving benefits after an initial week of aid fell 64,000 to 1.81 million in the week ended March 24, the lowest level since December 1973. The four-week moving average of the so-called continuing claims dropped 13,500 to 1.85 million, the lowest reading since January 1974.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)