With a new administration on the horizon in January, we review what President-Elect Joseph Biden has said about the tariffs the Trump administration imposed on China beginning in January 2018. As a reminder, the U.S. has cited several precipitating factors for the tariffs, including economic issues, such as China’s unwillingness to protect American intellectual property (including the forced sharing of technology between American I.P. owners and Chinese factories), the trade imbalance, currency manipulation and state funded R&D and subsidies, as well as human rights and geopolitical issues (Taiwan, Hong Kong, the South China Sea, Tibet, India/Kashmir, etc.).
The President-Elect’s website does not directly address the Chinese tariffs, though various of his statements suggest that he intends to focus first on (i) pressing domestic affairs and (ii) rebuilding the coalition of international allies weakened during the Trump presidency before making significant changes to the existing trade status with China.
In an article he wrote for Foreign Affairs magazine, Biden laments Trump’s “ill-advised trade wars” which he described as “hurting the American middle class” and generally incorporates trade into his broader foreign policy agenda, which includes addressing “climate change,” “mass migration,” “technological disruption and infectious diseases.”
Because he regrets that “the international system that the United States so carefully constructed is coming apart at the seams,” his top foreign policy priority is to rebuild weakened alliances through what he is calling a “Summit for Democracy,” which he intends to host in his first year as president. Here, democracies would renew commitments in three areas: “fighting corruption, defending against authoritarianism, and advancing human rights in their own nations and abroad.” If trade is directly addressed at this Summit, it will likely be as a tool to press these social and political goals. Biden does note that one of the goals of this program is “to build a united front of U.S. allies and partners to confront China’s abusive behaviors,” which presumably includes trade.
Biden has famously said “economic security is national security” but he has also made clear his priority will be domestic economic security when he says “trade policy has to start at home, by strengthening . . . our middle class, [which] will require enormous investments in our infrastructure—broadband, highways, rail, the energy grid, smart cities—and in education.”
While this statement conflates trade policy with domestic investment, Biden does recognize that trade’s impact on the U.S. worker is relevant, and has said that the U.S. will seek to take “down trade barriers that penalize Americans” while at the same time reversing what he calls “a dangerous global slide toward protectionism” – a hallmark of the Trump administration – suggesting a lessening of tariffs eventually where it will be good for the American middle class.
In addressing the possible timing of any new trade deals, Biden said “I will not enter into any new trade agreements until we have invested in Americans and equipped them to succeed in the global economy. And I will not negotiate new deals without having labor and environmental leaders at the table in a meaningful way.” This suggests that foreign trade will need to wait for the stabilization of the U.S. economy and the development of a trade negotiating team organized around American social values.
Of course, overarching all of this is political pressure. According to the South China Morning Press, while leaders in Beijing are optimistic that a Biden presidency will eventually reverse the unpredictable trade practices of his predecessor, experts believe “Biden would be under immense pressure to maintain a strong trade stance against China, making significant shifts in current U.S. policies towards China unlikely in the early months.” Chinese officials understand Biden will be politically motivated not to “validate Trump’s claims that [he is] soft on China.”
Read together, these political realities and Biden’s own words strongly suggest the U.S. will continue to be strident in its trade negotiations with China, and any negotiations will likely take place only once he believes he has stabilized the domestic economy, developed a trade negotiating team versed in economic and social issues, and rebuilt a global coalition of like-minded allies. If this is so, the Trump tariffs appear likely to remain in place for the foreseeable future.
Headlines of the Week
VF Corp said on last week it would pay $2.1 billion to buy streetwear apparel company Supreme, adding another popular brand to the Vans shoe maker’s roster. VF Corp, which also houses brands such as The North Face and Timberland, said it would make an additional payment of up to $300 million subject to satisfaction of certain post-deal closing milestones. It added that current investors Carlyle Group and New York-based private equity firm Goode Partners are selling their stakes in Supreme, which was founded by American-British businessman James Jebbia in 1994. Known for its red box logo with “Supreme” written in white, the brand has gained a following among “hypebeats,” or fans of the streetwear style, with product launches selling out in minutes and people lining up outside stores for hours. VF Corp’s deal with Supreme will help bolster its e-commerce business that has become the need of the hour for apparel and footwear makers due to the COVID-19 pandemic. “The Supreme brand will further accelerate VF’s hyper-digital business model transformation,” VF Corp Chief Executive Officer Steve Rendle said.
Chinese e-commerce giants Alibaba and JD.com racked up around $115 billion in sales across their platforms during the Singles Day shopping event, both setting new records. The record sales number comes as the Singles Day event, also known as Double 11 because it happens on Nov. 11, was extended beyond just a 24-hour period. Instead, promotions ran from Nov. 1 to midnight on Nov. 12. Alibaba said its total gross merchandise value (GMV) over the 11-day period, a figure that shows the total value of orders across Alibaba’s shopping platforms, totaled 498.2 billion yuan — or $74.1 billion. That figure nearly doubled last year’s 268.4 billion yuan. Meanwhile, JD.com’s transaction volume over the same period totaling 271.5 billion yuan ($40.97 billion), more than the 204.4 billion yuan it recorded in 2019. This year’s Singles Day event came as the Chinese economy continues to show signs of recovery after appearing to broadly control the coronavirus pandemic. But it was also overshadowed by huge stock price falls for both Alibaba and JD.com which came after Chinese regulators released draft rules that, for the first time, defines what constitutes anti-competitive behavior.
Apparel & Footwear
Justice has found a new home. Bluestar Alliance has signed an agreement to acquire the tween brand, which was put on the selling block by its bankrupt parent, Ascena Retail Group. Bluestar’s winning bid at a competitive auction conducted by Ascena was valued at approximately $90 million, and includes the intellectual property, certain related assets and the assumption of certain liabilities. Ascena, which filed for bankruptcy in July, has closed about 600 of Justice’s 820 stores. The existing Justice stores will remain open through the holiday season, with the wind-down of all locations expected by early 2021, the company said in a release. Justice’s new owner, Bluestar, is a brand management and marketing company whose brand portfolio includes Hurley, Bebe, Tahari, Brookstone, Limited Too and others. The company’s retail footprint includes more than 250 stores, shop-in-shops and distributors in North America and around the globe. The transaction is expected to close before the end of November 2020.
Revolve Group continues to make its way in an era marked by the coronavirus. But Wall Street wasn’t satisfied. The fashion e-tailer revealed quarterly results Wednesday after the market closed, falling short on top-line revenues, but still managing to increase profits, year-over-year. Even so, company shares fell more than 13 percent in after-hours trading. For the three-month period ending Sept. 30, top-line revenues were more than $151 million, down from more than $154 million the same time last year. Meanwhile, the company widened profits to $19.4 million for the quarter, compared with $9.5 million from the year-ago period. The company also had record adjusted earnings before interest, taxes, depreciation and amortization, which increased 66 percent year-over-year. Cofounder and co-chief executive officer Mike Karanikolas credited several cost-saving measures, such as the company’s merchandising and operational initiatives, for the strong quarter.
Tilly’s, Inc., a leading destination specialty retailer of casual apparel, footwear and accessories, announced that it has established a new $65.0 million asset-backed credit facility with Wells Fargo Bank, N.A. The ABL Facility is a three-year, $65.0 million asset-backed credit facility which replaces the Company’s previous $25.0 million revolving credit facility, also with Wells Fargo. The ABL Facility bears interest on borrowings at LIBOR plus 200 to 225 basis points, depending on usage and remaining availability, and includes an unused credit fee of 37.5 to 50 basis points, also depending on remaining availability. Total allowable borrowings under the ABL Facility are determined monthly as the lesser of $65.0 million and a percentage of eligible merchandise inventories and accounts receivable. “We believe our new ABL Facility will greatly improve our financial flexibility in light of the ongoing pandemic, both by meaningfully increasing our borrowing capacity and significantly reducing financial covenant pressures on our business,” commented Ed Thomas, President and Chief Executive Officer. Tilly’s is headquartered in Irvine, California and, as of November 9, 2020, operated 238 total stores across 33 states.
Bebe Stores is diversifying. The apparel and accessories retailer announced the purchase of 47 Buddy’s Home Furnishings rent-to-own franchises from Franchise Group for $35 million. The agreement also grants Bebe the rights to build additional franchises in protected geographies throughout the Southeastern United States. Bebe Stores closed all of its stores in 2017 to focus on its online business. It transferred its intellectual property rights, including licensing revenue and its website, to BB Brand Holdings, an operating subsidiary 50% owned by Bluestar Alliance, a brand management company. In 2018, Global Brands Group Holding Limited announced it was partnering with Bebe to relaunch an e-commerce platform and its international brick-and-mortar stores. Also in 2018, Bebe partnered with Bluestar Alliance to acquire the Brookstone brand and related assets.
Athletic & Sporting Goods
Adidas this week said third quarter sales in North America decreased 1% because of the pandemic’s ongoing economic impact and warned of a companywide sales decline in the fourth quarter because of the sudden re-acceleration in Covid cases. The German company, which has its North American headquarters in Portland, said its global business significantly recovered in the quarter, with sales and earnings approaching last year’s levels. Each of the company’s geographic sales territories improved over the second quarter, led by Russia (11%) and Europe (4%). But in North America, sales decreased 1%, despite sales increases in July and August that were fueled by the federal stimulus, according to the company.
Will Dad sneakers be enough to save Reebok? Bloomberg News has reported that Germany’s Adidas AG is exploring a sale of the shoe brand, which could be worth between about 1.5 billion euros ($1.8 billion) and 2.5 billion euros. Private equity groups Permira and Triton are circling the division, the Financial Times reported. There was no word from Adidas on whether it would offload a unit it has been trying to revive for years. But it did caution on overall fourth-quarter sales and profit, as current trading is being impacted by new lockdown measures in Europe. Admitting defeat on Reebok would be a rare strategic misstep for chief executive officer Kasper Rorsted, who has presided over a near doubling of the company’s share price since taking the helm in October 2016.
Cosmetics & Pharmacy
Target is partnering with Ulta Beauty on a new store-in-store concept. The Ulta Beauty at Target concept will offer shoppers an assortment of established and emerging prestige brands both online and at select Target locations nationwide beginning in 2021, the companies said. “The durable strategy we have built has made Target a top retail destination. The ease and convenience of our stores and fulfillment services provide broad reach and relevance for the curated brands our guests love,” Brian Cornell, chairman and CEO of Target, said. “In partnership with Ulta Beauty, a company that shares our deep guest focus, we are able to expand our growing beauty business with new, exciting brands, an immersive experience, and loyalty benefits to transform how our guests shop for all their beauty needs.” Each of the planned concepts will not only compliment Ulta Beauty’s current store footprint, but also mirror its existing stores with several feet of retail space that will be located next to the existing beauty section at Target.
Shiseido, hit by the global pandemic, posted a net loss for the first nine months of its fiscal year, as well as double-digit declines in sales and operating profit, the company said Tuesday. The company’s third-quarter results were significantly stronger than those of the second quarter, signaling a possible turnaround in the future. Japan’s largest cosmetics company posted a net loss of 13.67 billion yen, or $130.95 million, for the nine months ended Sept. 30. This was in contrast to a net profit of 72.46 billion yen in the same period a year earlier. Shiseido said it was due to lower sales, as well as extraordinary losses related to COVID-19, such as compensation of employees on leave and maintenance costs for stores and production facilities.
Revlon Inc. has announced the final results and expiration of its previously-announced exchange offer and consent solicitation by Revlon Consumer Products Corporation, its direct wholly-owned operating subsidiary that was made pursuant to the amended and restated offering memorandum and consent solicitation statement, dated October 23, 2020. The Company had offered to exchange any and all its 5.75% Senior Notes due 2021 issued pursuant to that certain indenture, dated February 8, 2013, by and among the Company, the guarantor parties thereto and U.S. Bank, National Association, as trustee, for (i) the cash consideration or (ii) the Mixed Consideration, in each case as described in the Amended and Restated Offering Memorandum. As of 11:59 p.m., New York City time, on Tuesday, November 10, 2020, approximately $236 million aggregate principal amount of the Notes had been validly tendered into the Exchange Offer and Consent Solicitation and not withdrawn.
Discounters & Department Stores
J.C. Penney on Thursday introduced a new private label brand, Stylus, part of their “New and Wow!” branding effort. The line is now available in 363 stores nationwide, through its app and online. Stylus features the comfortable style that consumers are seeking out these days as they continue to work from home, although the department store pushed back against the idea that Stylus is athleisure. The label includes cardigans, “easy pants,” jumpsuits and tees in sizes XS to 3X, “with consistent pricing from $26 to $89 across all sizes,” according to a company press release.
Walmart is piloting contactless deliveries with a self-driving car company, Cruise, in Scottsdale, Arizona, the retailer announced on Tuesday. Starting in early 2021, customers can have orders delivered from local Walmart locations through Cruise’s self-driving electric cars. The partnership is part of the retailer’s overall autonomous vehicle testing and effort to understand the technology’s role in retail going forward, the company said. Cruise’s fleet of self-driving cars consists of only electric vehicles. The collaboration supports Walmart’s goal of reaching zero emissions by 2040, per the company statement.
After rolling out Target Circle last October, Target’s free loyalty program has reached nearly 80 million members, the company said. Target Circle offers have totaled nearly $2 billion over the year since it rolled out. Rewards, where customers can earn 1% back on purchases, have reached nearly $200 million, according to Target. Target said with the program it is offering almost one million more deals to customers during the holiday season than in 2019.
When department stores took their cavernous stores with their varied assortments, savvy buyers and attentive associates to the mall decades ago, it was a win-win. The retailers could more easily reach all the customers who were filling up the suburbs, and the malls could chase that footfall up and down their corridors and into their smaller inline specialty tenants. These days, it’s more of a no-win situation. The question is, have malls chased away the anchors that once flocked to them, or have department stores disappointed as anchors?
Emerging Consumer Companies
Cookware brand Great Jones announced that it has raised $1.75 million in new funding from executives and restauranteurs, and announced that is expanding into bakeware. The new bakeware products (many of them inspired by classic Pyrex designs) include the Sweetie Pie ceramic pie dish, the Hot Dish ceramic casserole dish, the Breadwinner loaf pan, the Patty Cake cake pan and a new broccoli-colored version of the Holy Sheet baking sheet. The pieces are available à la carte (the Holy Sheet is $35, the pie pans are $45 and the bread pans are $65 for a pair) or as a whole set for $245.
Axel Arigato, the Swedish premium footwear brand, has partnered with Eurazeo. The deal calls for Eurazeo to invest $56 million into the company and to become the majority shareholder. Founded in 2014 in Gothenburg, Sweden, Axel Arigato will invest in its digital and e-commerce capabilities, develop its retail footprint in major European cities, and enhance the brand’s sustainability positioning. In addition, Eurazeo will use its international network throughout Europe, Asia and the United States to support the brand’s development in key markets.
So Good So You, the Minneapolis plant-based beverage brand, raised $14.5 million in growth funding led by Prelude Growth Partners with participation from existing investors. Founded in 2014 as Juice So Good, the company moved to the So Good So You brand name in 2016. It provides plant-based beverages that are cold-pressed with natural ingredients known to improve immune system health. The funding will be used to increase retail distribution and expand the team.
Grocery & Restaurants
Utz Brands, Inc. plans to acquire Truco Enterprises, Carrolton, Texas, for $480 million. Truco is a manufacturer of tortilla chips, salsa and queso sold under the On The Border (OTB) brand. The On The Border brand will provide Utz Brands with scale in the $6.2 billion retail tortilla chip category, which is the No. 2 sub-category in salty snacks, according to Utz. “This strategic acquisition will make Utz a significant competitor in the tortilla chip sub-category, where OTB holds the No. 3 position, and also provides us with a meaningful position in salsa, queso and dips,” said Dylan Lissette, chief executive officer of Utz. Utz Brands expects Truco Enterprises to generate $195 million in net sales during fiscal 2020.
KSL Capital Partners invests in Uchi parent Hai Hospitality
Private-equity group KSL Capital Partners LLC has invested in Austin, Texas-based Hai Hospitality, parent to the Uchi and Loro restaurant brands, the companies announced. Hai Hospitality’s founding chef and partner, Tyson Cole, will continue to head the company, which has six Uchi locations. Since opening the first location in Austin, five additional Uchi-branded restaurants have opened: Uchiko Austin in 2010, Uchi Houston in 2012, Uchi Dallas in 2015, Uchiba Dallas in 2016 and Uchi Denver in 2018. Hai also launched Loro Asian Smokehouse & Bar in 2018, in partnership with Aaron Franklin, the founder of Franklin Barbecue in Austin. The KSL investment will enable Hai Hospitality to accelerate growth and elevate the guest experience, the company said.
Home & Road
Purple Innovation reported significant increases in revenue and operating income for its third quarter ended Sept. 30. Net revenue increased 59.4% to $187.1 million, compared with $117.4 million in the year-ago period. The increase was driven by a 97.5% increase in direct-to-consumer revenue, while wholesale revenue came up 6.9% for the period. Operating income also made a major jump for the quarter, up 120.9% to $24.3 million, compared with $11 million in the third quarter of 2019. Even so, expenses attributed to the quarter brought the company to a net loss of $1.2 million, compared with a net income in 2019 Q3 of $8.4 million. Adjusted net income for the 2020 quarter was $17.2 million and excludes adjustments such as an $18 million non-cash expense associated with the change in fair value of warrant liabilities.
RTA furniture specialist Z-Line Designs has filed for voluntary Chapter 7 bankruptcy protection in U.S. Bankruptcy Court for the Northern District of California. The company was founded in 1995 by Jim Sexton, president and CEO, who was not immediately available for comment. Over the years it has been a major resource for home office furniture including desks, bookcase units file storage and seating, also producing home entertainment units and fireplace consoles.
Home furnishings manufacturer John-Richard was acquired in early November by a group headlined by company executive Alan Galbraith. Partners in the acquisition included The Dorman Group of Companies and Merit Capital Partners. Financial terms of the purchase were not disclosed. As part of the acquisition, Galbraith will transition from president to CEO of the Greenwood, Miss.-based maker of furniture, accessories, lighting, mirrors and more. In addition to purchasing the business, the new owners also purchased John-Richard’s corporate headquarters in Greenwood. The sale was concluded between the partners and Alex Malouf, founder of John-Richard, and the Malouf family.
Jewelry & Luxury
Alex and Ani founder and former CEO Carolyn Rafaelian has lost a New York State legal battle against Lion Capital, the London-based investment house that now owns the charm company. On Oct. 28, New York Judge Jennifer Schecter ruled that “there is no question” that Rafaelian owes Lion Capital $5 million as a result of the company’s restructuring last year. According to court documents, in 2015, Lion Capital acquired 40% of Alex and Ani. In the summer of 2019, it negotiated a settlement with Bank of America, after the bank claimed Alex and Ani had defaulted on a $100 million credit line.
With COVID-19 infections spiking in many areas of the country, it may not seem like the obvious moment to debut a physical pop-up shop. But Jennifer Shanker, founder of well-known New York City jewelry showroom Muse, asserts, “I believe that now more than ever, people want to look at beautiful things, to feel a sense of community, and to perhaps enjoy a little socially distanced, mask-wearing shopping.” Answering this call, Shanker has debuted a holiday pop-up shop in Greenwich Village to bring Muse’s coterie of independent fine jewelry brands to downtown New York City.
Experienced diamond cutters and gemologists are improving their ability to identify certain lab-grown diamonds with loupes and microscopes. How have they been able to do this without advanced laboratory equipment? By learning to recognize distinctive inclusion types when they occur.
Luxury brands have embraced China’s largest annual shopping spree, helping “Singles Day” break records once again. Firms including Balenciaga and Prada debuted on Singles Day, or Double 11, joining around 200 luxury brands – more than double last year’s figure. Singles Day is the world’s biggest 24-hour online shopping event. This year, the annual sale racked up $74bn (£56bn), with the luxury brands helping Tmall, Alibaba’s e-commerce platform, hit new highs. The event was seen as a gauge of the health of the Chinese economy as it emerges first from the pandemic. China’s Singles Day on 11 November saw 1.9bn products ordered and delivered last year.
Office & Leisure
Before the pandemic, Michael Afram’s transportation company was averaging 450 to 500 rides a day in the area between Los Angeles and San Diego. A hefty percentage of Karmel Shuttle Service’s destinations were Disneyland, Universal Studios and SeaWorld San Diego. With theme parks in California shuttered and air travel demand at a fraction of what it was in 2019, Afram’s business only had 140 transports for the whole month of October. Without the tourism boost from Disney’s parks, Karmel Shuttle Service’s revenue is down more than 95%, Afram said. As it stands, theme parks in California will remain shuttered well into 2021, as state guidelines prohibit reopening until coronavirus cases in counties fall below one per 100,000 — a target that will be difficult to achieve as cases soar throughout the country. This prolonged closure will be a massive drag on Disney’s earnings for quarters to come and exacerbate the financial difficulties that local businesses are facing during the pandemic.
Party City nearly closed the gap with 2019 sales for the third quarter, with total revenue down just 1.2% to $533.8 million. Brand comparable sales were up 8.3% in Q3, driven by the balloon, birthday and entertaining categories. The retailer said sales of Halloween products beat expectations thanks to sales of decor and better-than-anticipated costume sales, amid a holiday period shaped by the COVID-19 pandemic. Retail revenue was down 16% for October while brand comparable sales were down 2.9%. The company said declines in Halloween products were partly offset by sales in core categories. Party City also posted a 30.2% increase in curbside, delivery and BOPIS sales. Party City prepped for a disrupted Halloween season by scaling way back on its Halloween City pop-up stores. This year it opened just 25 stores, down more than 90% from 256 last year, though it added staff to each of its Halloween stores to help with fulfilling sales in other channels.
Petco Animal Supplies may go public — again. The pet supplies retailer announced it has confidentially filed a draft document for an initial public offering with the Securities and Exchange Commission. The company expects the IPO to take place after the SEC finishes its review of the S-1 filing and upon other closing conditions. This is not the first time that Petco, which is owned by private equity investors CVC and CPPIB, has gone the IPO route. The company first went public in 1994, but then went private in 2000 when it was acquired by TPG and Leonard Green in a $600 million deal. It went public again in 2002, but TPG and Leonard Green took it private again in 2006 in a $1.7 billion deal. They sold it to CVC and CPPIB for $4.6 billion in 2016.
Guitar Center, a 61 year-old musical instrument retailer owned by Ares Management, plans to file for prepackaged Chapter 11 bankruptcy protection, per the New York Times. Why it matters: This is one of the last chapters of private equity’s so-called Golden Age, during which well-known retailers were taken private with huge new debt obligations but without meaningful e-commerce strategies. Bain Capital bought Guitar Center for $2.1 billion in 2007, while Ares acquired control in 2014 via a debt-for-equity swap. It currently has around $1.3 billion in debt and missed an interest payment last month. The bottom line: “Although many people have turned to hobbies like playing music while homebound, the biggest winners have been those with the strongest e-commerce infrastructure. In musical instruments, the online retailer Sweetwater was already threatening Guitar Center’s brick-and-mortar business,” per the Times.
Technology & Internet
The European Commission said Tuesday that Amazon breached European antitrust rules by using independent sellers’ data for its own benefit. It has also announced a second formal investigation into the company’s e-commerce processes. In a statement, the commission said Amazon was using the data of third-party sellers — such as order numbers, revenues and number of visitors — to inform its strategic business decisions, like reducing the price of products. The issue arises because of Amazon’s dual role in selling products itself, and acting as a platform for independent — sometimes rival — sellers. “Data on the activity of third-party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers,” Margrethe Vestager, the EU’s competition chief, said in the statement. The commission, the executive arm of the European Union, launched a probe into the online retailer in July 2019 on concerns over anti-competitive behavior. Amazon said it disagreed with the commission’s assertions and “will continue to make every effort to ensure it has an accurate understanding of the facts.
The U.S. government has given TikTok a stay of execution. The Commerce Department said Thursday it will abide by an Oct. 30 temporary injunction that prevented the government from effectively shutting down TikTok. Earlier, TikTok filed a petition in the US Court of Appeals for the D.C. Circuit seeking clarity on its future. ByteDance, TikTok’s parent company, agreed to sell 20% of TikTok Global to Walmart and Oracle while making Oracle a “trusted technology partner” in the U.S. The Commerce Department order doesn’t address the CFIUS mandate demanding TikTok sell its U.S. assets. Rather, it reaffirms TikTok can continue to operate in the U.S. TikTok continues to wait for more government guidance about how to proceed with its minority stake sale.
Finance & Economy
The number of Americans applying for state unemployment benefits inched down last week to the lowest level since March but still remained significantly higher than pre-pandemic levels. The latest jobless claims figures from the Labor Department, which cover the week ending Nov. 7, show that 709,000 workers sought aid last week, about four-times the pre-crisis level. Still, it’s well below the peak of nearly 7 million in late March, when states first implemented lockdown measures to curb the spread of COVID-19. Jobless claims have not been this low since the week ending March 14, when 282,000 Americans filed for aid, shortly before the virus-induced crisis triggered a flood of layoffs. More than 66 million Americans ‒ roughly 40% of the nation’s labor force ‒ have applied for aid since the coronavirus lockdowns began in mid-March.
The explosive surge in U.S. coronavirus cases this fall has left a question hanging: When will the economy take its own turn for the worse? It may be starting. Red flags are appearing across a range of high-frequency measures of retail foot traffic, small business hiring and other data, and even previously bullish forecasters are increasingly concerned consumers may buckle in the face of rising health risks. In comments Fed chair Jerome Powell said that while he still sees the U.S. recovery on a “solid path,” the turn for the worse in the pandemic could deal the economy a blow.