Jobless Claims Fall Slightly as Another 847,000 Americans Apply for Unemployment Aid

Jobless Claims Fall Slightly as Another 847,000 Americans Apply for Unemployment Aid

ABI Bankruptcy Brief

January 28, 2021

ABI Bankruptcy Brief

Jobless Claims Fall Slightly as Another 847,000 Americans Apply for Unemployment Aid

The number of Americans filing for state unemployment benefits edged lower but remained elevated last week, as the labor market struggles to recover from a surge in COVID-19 infections nationwide amid new restrictions to help curb the spread of the virus, reported. Figures released today by the Labor Department showed that 847,000 Americans filed first-time jobless claims in the week ended Jan. 23, slightly lower than the 875,000 forecast by Refinitiv economists. The number is nearly four times the pre-crisis level but is well below the peak of almost 7 million that was reached when stay-at-home orders were first issued in March. Almost 70 million Americans, or about 40% of the labor force, have filed for unemployment benefits during the pandemic. The number of people who are continuing to receive unemployment benefits fell to 4.77 million, a decline of about 203,000 from the previous week. The report shows that roughly 18.28 million Americans were receiving some kind of jobless benefit through Jan. 9, an increase of 2.29 million from the previous week.

Analysis: The Economy Cooled in the Fall, but 2020 Proved Better than Feared

The U.S. economic recovery stumbled but didn’t collapse at the end of last year, setting the stage for a much stronger rebound this year, the New York Times reported. Gross domestic product rose 1 percent in the final three months of 2020, the Commerce Department said today. That represented a sharp slowdown from the previous quarter, when business reopenings led to a record 7.5 percent growth rate. On an annualized basis, G.D.P. increased 4 percent in the fourth quarter, down from 33.4 percent in the third. Looking at the quarter as a whole obscures the full extent of the slump: Many analysts believe economic output declined outright in November and December, as rising coronavirus cases and waning government aid led consumers to pull back on spending and forced businesses to shut down, in some cases for good. Personal income actually fell in the fourth quarter. But four weeks into January, the new year looks different. Aid passed by Congress in December has begun to flow in enhanced unemployment benefits, small-business loans and direct payments to households. Two runoff elections in Georgia delivered Democratic control of the Senate, making further rounds of assistance more likely. And the rollout of coronavirus vaccines, though slower than hoped, offers the prospect that hotels, bars and other businesses hurt by the pandemic will see customers return later this year. The late-year slump was driven by a slowdown in consumer spending. Spending grew less than 1 percent in the fourth quarter, compared with 9 percent in the third. But parts of the economy that are less exposed to the pandemic helped pick up the slack. The housing market continued to surge, partly because of low interest rates, and business investment was strong, a sign of confidence among corporate leaders. The economy is still in a significant hole, however. Measured against the final quarter of 2019, G.D.P. ended 2020 down 2.5 percent, making it the second-worst calendar year on record after a 2.8 percent contraction in 2008. Comparing 2020’s output overall with the previous year’s, G.D.P. fell 3.5 percent, the worst on record. The economy has regained roughly three-quarters of the output lost during the collapse last spring, and only a bit more than half of the jobs.

Schumer Warns Democrats Could Go It Alone on Coronavirus Relief as Soon as Next Week

Senate Majority Leader Charles Schumer (D-N.Y.) today warned that Democrats were willing to go it alone on the next coronavirus relief package, potentially starting the process as soon as next week, The Hill reported. Schumer, speaking from the Senate floor, said that it was the "preference" of Democrats to work with Republicans on a sixth coronavirus relief package, but that if GOP senators wanted to move too slowly, or go smaller than Democrats think necessary, they will move more aid without GOP support. "The dangers of undershooting our response are far greater than overshooting ... so the Senate as early as next week will begin the process of considering a very strong COVID relief bill," Schumer said from the Senate floor. "We have a responsibility to help the American people fast, particularly given these new economic numbers. The Senate will begin that work next week," Schumer continued. To pass more coronavirus relief without Republican support, Democrats will need to use reconciliation, a budget process that lets some bills bypass the 60-vote legislative filibuster. Democrats would first need to pave the way by passing a budget resolution that provides instructions to committees for drafting legislation. Sen. Dick Durbin (D-Ill.), Schumer's top lieutenant, said that Democrats are considering taking up the budget resolution next week "as a very real possibility," but stressed that no final decisions have been made.

Saved Stimulus Checks Expected to Help Spur Economic Recovery

Many U.S. consumers are starting 2021 flush with savings that are likely to help fuel the economic recovery this year, the Wall Street Journal reported. The latest federal COVID-19 aid package sent $600 checks to many households that also received relief money last year, while more affluent households have built up pools of cash by curbing their spending during the pandemic. Americans saved $1.4 trillion in the first three quarters of 2020, or about twice as much as in the same period of the prior year, according to analysis by Berenberg Economics. That amount is equivalent to nearly 10% of 2019 household spending, estimates Berenberg’s chief economist, Holger Schmieding. “In this unusual recession, governments have been unusually generous, people have not been able to spend the money, and hence they have the money and will to spend,” Schmieding said. Once business restrictions are lifted and people feel it is safe to go out again, “there will be a lot of spending — my guess is the beaches will be crowded, the pubs will be crowded,” and “by May and June it will be in full swing,” he said. President Biden is calling for a $1.9 trillion COVID-19 relief package to help Americans weather the economic shock of the pandemic. His plan, which so far is meeting resistance from Republicans, includes $1,400-per-person direct payments to most households and a $400 weekly unemployment insurance supplement through September. (Subscription required.)

Submissions for Asset Sales Committee’s “Asset Sale of the Year” Award Now Being Accepted!

ABI’s Asset Sales Committee has opened the application period for its 3rd Annual Asset Sale of the Year Award. Submissions are due by Friday, March 5, 2021. Please see below for more information regarding the contest as well as previous winners. Criteria for submissions include:

• Completion of a sale that was strategic and provided stakeholders with value;
• A display of excellence across the full spectrum of the sale process, from the initial targeting through pursuit, structuring and financing to complete a transaction;
• A sale that reflects a high level of professional expertise in the design of the transaction, and that tested creativity and skill in completing the transaction; or
• A sale of strategic or legal significance and impact (winning entries might focus on overcoming challenges to complete the sale, innovative financial engineering, and motivating agreement across multiple stakeholders)

A bankruptcy sale (via either § 363 or a plan) that closed between January 1 and December 31, 2020.

At least one professional involved in the sale must be a member of the Asset Sales Committee as of the nomination deadline. Self-nominations are permitted.

Click here for more information.

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New on ABI’s Bankruptcy Blog Exchange: OCC Halts Publication of 'Fair Access' Rule

The rule, finalized in the waning days of the Trump administration and scheduled to take effect in April, would have punished banks for denying services to certain firms without documented reasons for doing so, according to a recent blog post.The rule, finalized in the waning days of the Trump administration and scheduled to take effect in April, would have punished banks for denying services to certain firms without documented reasons for doing so, according to a recent blog post.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

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