Daily Business Briefing
Oct. 8, 2021Updated
Oct. 8, 2021, 6:39 p.m. ET
Oct. 8, 2021, 6:39 p.m. ET
Disney theme park fans, prepare to dig a little deeper. Walt Disney World released more information about its new paid line-skipping system on Friday, and complete access will add roughly $40 to the price of daily park entry, which already costs $109 to $159 for adults, depending on the day. The system will debut on Oct. 19.
Waiting in long lines to board rides is Disney World’s top visitor complaint, and Disney for decades offered a free Fast Pass, which eased the burden. In August, Disney said it would permanently retire Fast Pass at its domestic parks and begin charging for the privilege of skipping the line.
All ticket buyers will now have free access to a sophisticated new app, Disney Genie. It works much like the GPS in your car, creating an itinerary based on preferences — rides, shows, restaurants — and updating as conditions change (rain, what’s busy and what’s not, impromptu detours for turkey legs). Disney World, a 40-square-mile Florida megaresort that has four separately ticketed theme parks, can be daunting to navigate, and Disney knows that people will spend more time and money at the complex if they find the experience less overwhelming.
For $15 a person, Disney Genie+ will provide Lightning Lane entry to most of the most-mobbed attractions. Those include classics like Big Thunder Mountain Railroad, Pirates of the Caribbean and Splash Mountain. Two of the busiest rides at each park, however, will be carved out of that offering; to skip the line at those, visitors will need to pay à la carte fees, which will vary. For instance, Lightning Lane access to the Expedition Everest roller coaster will cost $7 per person, while the same perk at the high-tech Star Wars: Rise of the Resistance ride will cost $15.
Disney dominates the theme park business, but most operators started to tap this revenue stream years ago. Universal Orlando charges $70 to $90 for its line-skipping passes, while Dollywood sells one for $49.
SAN FRANCISCO — Facebook and its family of apps were inaccessible for about two hours on Friday afternoon, the second time in a week that the social network experienced widespread problems with its services.
The site DownDetector.com, a service that relies on reports from users to determine whether websites are having problems, showed that all of Facebook’s main products — Instagram, WhatsApp, Messenger and the “big blue app” of Facebook — suffered downtime at around 3 p.m. Eastern time.
Just after 5 p.m. Eastern time, Facebook said it had fixed the issue, which had affected people around the world. The social network said the outage was caused by a “configuration” change, which typically refers to adjustments in the company’s underlying technical infrastructure, but it did not provide further detail.
“Sincere apologies to anyone who wasn’t able to access our products in the last couple of hours,” the company said
Facebook said that Friday’s outage was not related to problems it had on Monday, when its apps were down globally for more than five hours.
Monday’s outage was a stark reminder of just how much of the world relies on one or more of Facebook’s apps. More than 3.5 billion people worldwide use them regularly. Entrepreneurs and business owners said they were unable to make sales on Instagram or through their Facebook storefronts during the outage, in some cases costing them thousands of dollars.
Outside of the United States, people in countries that are heavily reliant on WhatsApp — Brazil, India and the Philippines, among others — were unable to communicate with friends, families, colleagues or customers. WhatsApp is used by more than one billion people globally.
After Monday’s outage, as the apps slowly came online again, the company cautioned that its services would take time to stabilize.
Lawyers with the Securities and Exchange Commission have served a subpoena on Archegos Capital Management, the $10 billion family investment office that suddenly collapsed in March, roiling the stock market as its losses reverberated through the banking industry.
The subpoena was served to the firm in the past few weeks, according to a person familiar with the matter who was not authorized to speak publicly.
The issuance of a subpoena is not particularly surprising. Lawyers from the S.E.C., the Manhattan U.S. attorney’s office and the Commodity Futures Trading Commission have been looking into the collapse of Archegos since its heavy bets on a small number of stocks rapidly unraveled seven months ago. Even so, the subpoena marks the transition to a formal investigation.
A spokesman for the S.E.C. declined to comment on the investigation, which was first reported by Bloomberg. A spokesman for Archegos declined to comment.
Investigators are focusing mainly on whether Archegos’s founder, Bill Hwang, misled the banks through which he invested in sophisticated derivatives about the risk he was taking on at his firm, according to the person familiar with the matter. The S.E.C. is also believed to be looking into whether Archegos violated any regulating rules that would have required the firm to disclose some of its hefty stock positions, the person said.
In appearances before Congress, Gary Gensler, the S.E.C.’s chair, has said that the Archegos trading debacle revealed gaps in the regulatory requirements for investment firms and lightly-regulated family offices when it comes to disclosing big positions in derivatives.
The collapse of Archegos was particularly painful for Credit Suisse, which lost $5.5 billion, sparking a major management shake-up. A report by a law firm hired by the bank’s board found “fundamental failure of management and controls” at the bank.
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Biden Stresses Low Unemployment Rate After Weak Jobs Report
The Labor Department reported that the economy had added 194,000 jobs in September, well below the half-million forecasted. President Biden, however, expressed optimism, pointing to wage growth and an unemployment rate below 5 percent.
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In just eight months since I became president in the midst of a grave public health and economic crisis, the unemployment rate is now down below 5 percent, at 4.8 percent. A significant improvement from when I took office and a sign that our recovery is moving forward even in the face of a Covid pandemic. That improvement was widespread. Unemployment for Hispanic workers was down and the unemployment rate for African Americans fell almost a full percent, and it’s now below 8 percent for the first time in 17 months. Jobs up, wages up, unemployment down. That’s progress, and it’s a tribute to the hard work and resilience of the American people. I too would like to, as I said, move it faster. We’re making consistent, steady progress, though.
President Biden stressed the sunny side of a disappointing jobs report on Friday, touting an unemployment rate that fell below 5 percent for the first time since the Covid-19 pandemic began last year, while conceding he would like to see more rapid job creation in the months ahead.
“When you take a step back and look at what’s happening, we are making real progress,” Mr. Biden said. “Maybe it does not seem fast enough. I would like to see it faster, and we’re going to make it faster.”
The president sought to take credit for continued progress in the labor market under his watch, including wage gains and job creation — and, at the same time, said the state of the economy shows the need for trillions of dollars in new spending and tax cuts that Democrats are trying to pass through Congress.
The Labor Department reported on Friday that the economy added 194,000 jobs in September, well below consensus forecasts for about a half-million jobs. It was the second consecutive month of disappointing job gains. Analysts blamed the weakness in part on a wave of infections from the Delta variant of Covid-19, which peaked nationwide in early September, and in part on statistical quirks of the pandemic’s effects on school reopening. Mr. Biden noted that cases have fallen sharply since the report’s data was collected.
Mr. Biden has for months attempted to make a nuanced, jobs-focused case for his plans to invest in physical infrastructure like roads and water pipes, paid leave, expanded public education, care for children and older and disabled Americans, and more, which are currently contained in a pair of bills that have not yet passed the House.
“We need to stay focused on what these goals will mean to the people who are just looking for a little bit of breathing room,” Mr. Biden said, and a “fair chance to build a decent middle-class life, to succeed and thrive instead of just hanging on by their fingernails.”
He has sought to both claim credit for the nearly five million jobs the country has created since he took office, while arguing his plans would create more — and better-paying — jobs in the future.
At the same time, economists both inside and outside of Mr. Biden’s administration have struggled to explain why so many available jobs in the country remain unfilled. Employers have a record number of job openings and a litany of complaints that they cannot find qualified workers even after raising their wage offerings.
The president did not address that issue on Friday.
Republicans have said for months that expanded unemployment benefits, including a $300-per-week supplement from the federal government for unemployed workers, have kept people from returning to work. But there was little evidence of a hiring surge this summer in states that moved to cancel the benefits early. The benefits lapsed in September for all states that had maintained them — and Mr. Biden’s team saw little sign on Friday that the expiration had boosted employment.
“This report shows that the unemployment extra benefit had no impact at all, in keeping people out of work,” Martin J. Walsh, the labor secretary, said in an interview. “And I think that we’re all trying to struggle to find what the right answer is” to why workers are not flocking to open jobs.
The unexpected drop in hiring in September may have been a result of quirks in the way the government reports the data. But the broader recent slowdown is no statistical fluke — the rise of the Delta variant has clearly taken a toll on the economy.
The Labor Department said on Friday that government employment fell by 123,000 jobs in September, with most of the losses coming in education.
But public schools didn’t actually lay off tens of thousands of teachers, custodians and other workers. That figure is seasonally adjusted, meaning that it tries to account for predictable annual patterns in hiring and firing. One of the most predictable patterns of all: Schools hire lots of workers in September, and lay them off in June and July.
The pandemic, however, has disrupted those patterns. Early in the pandemic, many schools laid off workers earlier than usual. This year, some schools started hiring earlier than usual, meaning they also did less hiring in September than in most years. (Another possible factor: Many school districts have reported having difficulty hiring bus drivers and other workers, which could be holding down job growth.)
On an unadjusted basis, the government actually added close to 900,000 workers in September. Because that’s fewer than in a typical September, the seasonal adjustment formula interprets it as a loss in jobs.
Seasonal adjustment can help explain why job growth was weaker in September than in August, but it can’t explain why job growth in the last two months has been weaker than in the spring and early summer. That slowdown is real, and it reflects the impact of the Delta variant.
Employers in leisure and hospitality, one of the sectors hit hardest by the pandemic, added hundreds of thousands of jobs per month from February through July, as restaurants reopened and Americans began traveling more. But the sector added just 38,000 jobs in August and 74,000 in September.
Overall, private sector job growth has slowed to a pace of a bit above 300,000 a month over the last two months, from more than 800,000 a month in June and July.
Job growth in sectors less affected by the pandemic was relatively strong in September, however. Construction companies, manufacturers and retailers all added jobs, suggesting that the effects of the latest virus wave have been fairly contained.
More than a year and a half into the pandemic, the active U.S. labor force is not bouncing back much, an alarming reality that could weigh on the economy’s growth — and bad news for policymakers at the Federal Reserve and White House who have been hoping to see worker participation rebound.
The share of people who were working or looking for work last month — the so-called labor force participation rate — dipped to 61.6 percent, down slightly from the prior month. Participation for people in their prime working years, defined as 25 to 54 years old, also ticked down.
At the same time, average hourly earnings climbed 0.6 percent in September from the month before, more than the 0.4 percent economists had expected, and have jumped by 4.6 percent over the last year.
The combination of stagnant labor force participation and rising wages creates an alarming picture for economists and investors, one in which costs are increasing as the outlook for growth is increasingly grim. With fewer people working and earning paychecks, the economy can produce less over time. And as employers have to pay more to attract workers, they may have to increase prices to cover their rising costs, feeding into high inflation.
When workers who have left the labor market will return to it — and whether some may be sidelined permanently — remains one of the most critical questions facing economists and policymakers.
Companies eager to hire had hoped that September might be a turning point, as schools reopened and expanded unemployment benefits expired, prompting people who were out of work because of child care issues — or were afforded more flexibility by government help — to return to the job search.
But that prognosis was complicated by timing and the coronavirus. The September jobs report survey was taken shortly after the expanded benefits expired, which may have made for a messy read on any effect from their expiration. And it came as infections from the Delta variant were high, potentially keeping people at home.
There had been just over 2,000 school closings for coronavirus outbreaks across nearly 470 school districts in 39 states through mid-September, Lael Brainard, a Fed governor, pointed out in a recent speech.
“The possibility of further unpredictable disruptions could cause some parents to delay their plans to return to the labor force,” Ms. Brainard warned.
Fed officials, who have been buying $120 billion a month in bonds and holding interest rates near zero to keep borrowing cheap and help the economy, will continue to watch for a pickup in the participation rate.
The report is not good news for the Fed, but it may not be enough to derail its plans to begin slowing asset purchases as soon as next month. Officials have repeatedly said that they are basing that decision on cumulative job market progress rather than on the latest data.
U.S. stocks fell slightly on Friday after the government reported that U.S. employers added far fewer jobs in September than expected, while wage gains were faster than anticipated.
Employers added 194,000 jobs last month, compared with economists’ expectations of about 500,000, the Labor Department said.
Employment in the leisure and hospitality sectors rose by 74,000 jobs in September, after flatlining last month amid evidence that labor shortages and the spread of the Delta variant were hampering hiring. The jobs data released on Friday was collected in mid-September, when the Delta wave was near its peak, but since then, cases and hospitalizations have fallen.
The S&P 500 ticked down 0.2 percent. Stocks in Europe closed lower, with the Stoxx Europe 600 down 0.3 percent.
Government bond yields rose, with the yield on 10-year notes climbing three basis points to 1.60 percent.
Slowing jobs gains could weigh on decisions at the Federal Reserve to reduce monetary stimulus in the form of government bond purchases, but traders and policymakers are also watching closely for signs that higher prices will lead to longer-lasting inflation and might prompt more action from the central bank.
The jobs report showed average hourly wages rose 0.6 percent in September, more than economists were forecasting. Officials have signaled that they will soon begin to slow the bond purchases — something they could announce as soon as November based on progress in the labor market. The September jobs report will probably not derail those plans, which officials have said are based on cumulative job gains, and not a single month’s data.
“The low bar for the Fed to announce quantitative easing tapering was surpassed,” Lydia Boussour, the lead U.S. economist at Oxford Economics, wrote in a note. “And, with debt ceiling shenanigans pushed back until Dec. 3, the road is clear for an announcement at the November F.O.M.C meeting,” she added, referencing the Federal Open Market Committee.
The Economic Injury Disaster Loan Advance, an emergency relief program hastily rolled out in the early days of the pandemic, had such poor fraud protections that it improperly doled out nearly $4.5 billion to self-employed people who said they had additional workers — even those who made wildly implausible claims, like having one million employees.
The $20 billion program offered small businesses immediate grants of up to $10,000 in the months after the pandemic shuttered much of the economy. But there was no system to catch applications with “flawed or illogical information,” Hannibal Ware, the Small Business Administration’s inspector general, wrote in a report released on Thursday.
Nearly 5.8 million applicants received grants based on their company’s head count: $1,000 each for up to 10 workers. Sole proprietors and independent contractors who employed only themselves should have collected a maximum grant of $1,000 — but many collected bigger checks.
Some of the claims were outright absurd. Hundreds of applicants received the maximum grants after saying that they employed more than 500 workers, a number that would generally make them ineligible for the small business program. Fifteen said they had one million employees — a figure that would put them in league with Amazon and Walmart.
The report, which described how the agency could have spotted bogus applications by taking even rudimentary steps to prevent fraud, was the latest black eye for the S.B.A. READ THE ARTICLE →
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Tesla will move its headquarters from California to Texas, where it is building a new factory, its chief executive, Elon Musk, said at the company’s annual shareholder meeting on Thursday. The move makes good on a threat that Mr. Musk issued more than a year ago when he was frustrated by local coronavirus lockdown orders that forced Tesla to pause production at its factory in Fremont, Calif. Mr. Musk said the company would keep that factory and expand production there. READ MORE →
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Google said on Thursday that it would no longer display advertisements on YouTube videos and other content that promote inaccurate claims about climate change. The decision, by the company’s ads team, means that it will no longer permit websites or YouTube creators to earn advertising money via Google for content that “contradicts well-established scientific consensus around the existence and causes of climate change.” And it will not allow ads that promote such views from appearing. READ MORE →
As the economy registered disappointing job growth in September, the divide between those with and without a college education was again stark.
Employment for holders of a bachelor’s degree rose by 169,000, and the unemployment rate for that group fell to 2.5 percent from 2.8 percent in August. By contrast, among those with a high school diploma but no college studies, employment fell by 394,000. Their unemployment rate declined to 5.8 percent from 6 percent, but only because nearly 500,000 people dropped out of the labor market.
White-collar jobs, which tend to go overwhelmingly to college graduates, have an advantage as the economy reckons with the coronavirus: They can be done remotely in many cases. Less-educated workers are more likely to work in face-to-face settings that have been heavily affected by the pandemic.
“We’re still down about five million jobs from prepandemic levels, and 1.6 million of those jobs are in leisure and hospitality,” said Scott Anderson, the chief economist at Bank of the West in San Francisco. “There are still a lot of folks that haven’t been made whole from this pandemic.”
Lower-income households are under additional stress from the rise in energy prices, he added, as well as rising health care costs and rents. “They’re not benefiting from high housing prices,” Mr. Anderson said. “They need additional government support to weather the storm.”
After pausing during the worst of the pandemic in 2020, many large companies are hiring again, and college seniors and recent graduates are benefiting, according to recruiters and placement agencies. On the other hand, the spread of the Delta variant has slowed activity among some employers of less-skilled workers.
“I was a bit more encouraged before the Delta variant,” said Plinio Ayala, the chief executive of Per Scholas, a nonprofit group that provides skills training for young people in urban areas to prepare them for tech careers. “It has slowed things down significantly.”
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