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A big dose of fiscal support for the US economy will be withdrawn this week as more than 7.5m people lose pandemic-era jobless benefits, testing the strength of the economic recovery amid a resurgence of Covid-19.
The expiration of extra federal unemployment payments highlights a shift in America’s policy response to the coronavirus crisis — away from emergency measures to support the labour market in favour of long-term changes to the safety net backed by US president Joe Biden.
But the transition comes at an awkward time for the US economy and the Biden administration. There was a sharp decline in the numbers of jobs created last month in America as the Delta variant of Covid-19 spread, with a big impact on the leisure and hospitality sector and construction.
There is also confusion surrounding the reopening of schools in the US after the summer break as the number of positive cases among children nears the January peak and staff shortages lead to disruption.
The debate over the end of the jobless benefits comes as the impact of $1,400 direct payments in the form of stimulus cheques — another core element of Biden’s stimulus — has faded.
Five more stories in the news
1. Deutsche Telekom deepens bet on US market Germany’s dominant telecoms operator has agreed a multipronged deal with Japan’s SoftBank that will see it increase its ownership of T-Mobile US as it seeks to compete with Verizon and AT&T.
2. Jitters spread through China’s property bond market Borrowing costs for some of China’s leading real estate companies are rising in a sign that fears over debt problems at developer Evergrande are spreading more widely through the sector.
3. Berlin blames Moscow for cyber attacks Germany has accused Russia of launching a spate of online attacks on politicians amid suspicions that Moscow is interfering in this month’s federal election to pick a successor to Chancellor Angela Merkel.
4. UK privacy overhaul Britain will launch a push to bolster online privacy this week by seeking to persuade fellow G7 countries to limit internet tracking via “cookies”. Britain is recommending a less intrusive alternative system in which people set their privacy preferences a single time in their browser.
5. ‘Shang-Chi’ smashes records in US cinemas Marvel’s first superhero movie with an Asian lead character, Shang-Chi and the Legend of the Ten Rings, generated $90m in US ticket sales over the weekend, making it the most successful Labor Day release on record. The popularity of the movie was a milestone for Asian-American representation on the big screen.
The Biden administration’s plans to widely administer coronavirus vaccine booster shots later this month has become mired in confusion.
Hong Kong is to allow visitors from the Chinese mainland to enter the territory without meeting its strict quarantine conditions, chief executive Carrie Lam has announced.
China’s Sinopharm aims to develop its own mRNA vaccine, becoming one of the first Chinese pharmaceutical groups to use the technology to combat Covid-19.
Follow our live coverage and sign up to our Coronavirus Business Update for a regular briefing on how the pandemic is affecting the economy. The FT’s customisable Covid-19 tracker has the latest data from any country or US state.
The day ahead
Bitcoin Twenty years after it adopted the US dollar as its national currency, El Salvador will today become the first country in the world to make bitcoin legal tender.
Opinion: El Salvador’s hasty adoption of bitcoin is fraught with risk, says the FT’s Editorial Board, and ordinary citizens are likely to pay a heavy price for their president’s gamble.
Brazil celebrates Independence Day South America’s largest country celebrates gaining independence from Portugal in 1822 with a military parade in Brasília and many other state capitals and cities around the country. Financial markets will be closed.
What else we’re reading
What is the cost of extreme weather? Over the past five decades, the losses owing to extreme weather amounted to $3.6tn and 2m deaths, according to the World Meteorological Organization. Economic losses have increased as extreme weather events became more frequent but the high death tolls have been partly reduced, thanks to better evacuation planning.
Xi’s blueprint for a digital dictatorship In recent weeks, Beijing has pushed through reams of regulations designed to shore up China’s data security. The legislation is part of leader Xi Jinping’s vision to build what some analysts call a “techno-authoritarian superpower”. This is the second in a series on Xi’s assertion of greater control in China. The first part is here.
‘Orange collar’ workers: not the solution to labour shortages As employers all over the world face labour shortages, triggered in part by the return of migrant workers to their home countries, some are grasping for an alternative: prisoners. One could argue this use is a win-win. But much of the work is poor preparation for life outside, writes Sarah O’Connor.
Supply chain squeeze hits chairs and cupboards Manufacturers of everything from cupboards to cars are still grappling with a logistics crunch that has disrupted supplies of essential inputs, threatening the post-pandemic economic rebound. Combined with rising consumer demand, in Europe, these shortages have led to inflation reaching a decade high.
Fleeing Afghans revive US memories of Vietnam’s ‘babylift’ Images of Afghans fleeing Kabul airport have revived memories for many Americans of Operation Babylift, which airlifted 2,000 orphans out of Vietnam weeks before Saigon fell. There are also fears that the warm welcome Afghans fleeing persecution have received could soon fade, writes Patti Waldmeir.
Car traffic has returned to near pre-pandemic levels in Williamsburg, Brooklyn, but for cyclists the streets are more manageable than the busy thoroughfares of Manhattan. Emily Goldberg provides a guide to her four favourite bike routes through the New York borough.
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