This is the web version of the WSJ newsletter on business. You can sign up for daily delivery here.
Big wins, lasting losses
The US employment report for August comes out Friday and should show another month of historic job gains. But the number of jobs will remain well below the level of the prepandemic and many Covid-19 Layoffs become permanent: Thousands of workers on leave are told they will not return as companies prepare for years of disruption related to pandemics. MGM Resorts and Stanley Black & Decker recently told some employees who were concerned at the start of the coronavirus pandemic that they would not be put back on the payroll. And companies bringing back the majority of workers on leave, including Yelp and Cheesecake Factory, are cutting costs as they adjust to the new reality that many coronavirus-related closings cannot be resolved this fall. Patrick Thomas, Sarah Chaney and Chip Cutter report further layoffs from major employers.
Economists say the new layoffs reflect a shift in corporate thinking towards a longer lasting crisis. “Businesses that thought they could either temporarily cut wages or temporarily cut or hold costs are now finding that the pandemic’s weakness is now longer than hoped,” said Diane Swonk, chief economist at Grant Thornton.
WHAT YOU NEED TO WATCH TODAY
Richard Clarida, Vice Chairman of the Federal Reserve will speak about the Central Bank’s new monetary policy framework at 9:00 am ET Raphael Bostic, President of the Atlanta Fed talks about philanthropy at 10:30 am ET.
The Dallas Fed The August production survey is published at 10:30 am CET.
China’s caixin manufacturing index for August is at 9:45 p.m. ET.
Spend winners and losers
U.S. consumers increased their spending in July, albeit at a slower pace than in previous months, as new coronavirus infections increased and heightened unemployment controls threatened to expire. Total consumer spending remained 4.6% below pre-pandemic February levels. The big gap: goods for services. Americans buy cars and housewares, but not airline tickets or movie tickets.
At the national level, consumers have reduced travel costs according to the US Travel Association, only half of their spending last summer. However, more people visited Fort Sumter National Park in South Carolina and Sleeping Bear Dunes and Pictured Rocks on the shores of Lake Michigan in July than in any month since the National Park Service began tracking it in 1979. Visits to Valley Forge in Pennsylvania and Maryland’s Assateague Island hit multidecade highs last month. State parks have reported similar waves. The big vacation is over. America goes camping (and boating and hiking and fishing) instead, reports Gwynn Guilford.
Americans aren’t the only ones vacationing near home. China is in the middle of one Theme park boom as local tourists seek entertainment in their own backyards. The pandemic was a setback for the region’s main venues: Shanghai Disneyland closed from January to May and then reopened with only 30% capacity. The official limit has since increased to 50%, with social distancing measures at discretion. For some regional parks, which seldom exceeded half their capacity before the coronavirus, the international shutdown of travel appears to be increasing visitor numbers. From August onwards, domestic tourism in China recovered almost to pre-Covid-19 levels, reports Trefor Moss.
Activities across China’s manufacturing sector increased for the sixth straight month. China’s official index for purchasing managers in manufacturing fell to 51.0 from 51.1 in July, the National Bureau of Statistics said on Monday, but remained above the 50 mark that separates expansion from contraction. China PMI without manufacture, including service and construction, rose from 54.2 in July to 55.2 in August, a sign that Beijing’s efforts to stimulate home consumption are having an impact.
Federal Reserve Chairman Jerome Powell said a new target for average inflation of 2%. However, because he excluded any mathematical definition of the average, anything from serious deflation to 3.2% inflation over the next five years could be considered a success. Should the average be since the Fed passed its 2012 target? Since Mr Powell took over in 2018? Five years ago? There is no one right answer, and the results are varied enough to matter to policy: Starting in 2012 and over the next five years, it will take 3.2% inflation to get the average on target. Start with Mr. Powell’s appointment and it must be 2.3%, while starting five years ago would require 2.5% inflation, writes James Mackintosh.
Balance between supply and demand on the high seas
When countries began locking up their economies earlier this year amid the spreading coronavirus pandemic, global container lines were preparing for a sharp decline Shipping demand. While trade flows have decreased, profitability across the shipping industry is growing and some operators are reporting their best profits in years. The reason: When demand collapsed in March and April, the liner companies began to cancel trips and withdraw ships from service. At the same time, falling oil prices have greatly reduced fuel costs for airlines. Based on the half-year results in 2020, the top dozen airlines have increased their profits by around 150% on average compared to the previous year, reports Costas Paris.
WHAT WE’LL READ
Do you remember life before Covid-19? Do you remember driving to work? “A total of $ 758 million per day will be saved by Covid employees who used to drive for the commute. This equates to a cumulative savings of over $ 90 billion since the pandemic began. To put this in perspective, commuters who used to commute by car prior to the pandemic have each saved over $ 2,000 since mid-March, including the cost of driving to the public. While these savings are large, they don’t even include the benefits of those commuting via other modes of transport or the additional 16.9 million hours of commuting saved per day that were removed prior to Covid, ”writes Adam Ozimek, Upwork’s chief economist a recent report.
SIGN UP FOR OUR CALENDAR
Real Time Economics has released a downloadable calendar with accurate forecast forecasts and analysis of the major US data releases. To add to your calendar please click here.