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One year after crude turned negative, oilpatch relishes first-quarter profit outlook

Oil looks to bounce back

One year after oil prices crashed to their first and only negative close during a perfect storm of energy demand bad news, Canada's oilpatch is poised to report a first-quarter gush of cash flow thanks to a dramatic recovery in global demand.

On April 20, 2020, the U.S. benchmark West Texas Intermediate near-month contract price ended the day down a whopping US$55.90 at an unprecedented –$37.63 per barrel.

The negative close was caused by a mix of technical commodities market factors and concerns about oversupply as storage tanks grew dangerously close to full amid a collapse in demand fuelled by pandemic lockdowns and short-lived price war between Saudi Arabia and Russia, said senior commodity analyst Martin King of RBN Energy in Calgary.

"Everyone was very, very negative on oil and oil demand," he recalled in an interview, adding the remarkable level of stabilization since shows how resilient the oilpatch can be.

"So the market essentially wound up balancing itself out and we had a recovery from the depths of hell to not quite to heaven in terms of current prices, but certainly a very large scale recovery.

"Those two forces of supply and demand were brought back into a much better balance and with the demand recovery we're seeing this year, we're seeing inventories worldwide get drawn down to more normal levels."

On Friday, the WTI price settled at US$63.19 per barrel, a level at which most production in North America, including in the Alberta oilsands, is profitable, said King.

WTI daily spot prices have averaged US$60.46 per barrel so far in the second quarter, up from US$58.13 in the first quarter. Both are a far cry from the US$27.95 per barrel average in the second quarter of 2020.

On Wednesday, the International Energy Agency raised its world oil demand estimate for 2021, pointing to further signs that the global economy is recovering faster than previously expected, particularly in the U.S. and China.

It now expects world oil demand to expand by 5.7 million barrels per day in 2021 to 96.7 million bpd, following a collapse of 8.7 million bpd last year.

Expectations are high for the Canadian oilpatch's first-quarter results season, which starts Monday after markets close with PrairieSky Royalty Ltd., several analysts who cover the sector said in reports over the past week.

"Emerging from one of the worst cycles in recent memory, we believe the sector is now positioned in some of the healthiest ranks," says a report from analysts at National Bank Financial.

"The survival mode necessitated and forced companies to reconsider capital spending habits, dividend policies, acquisitions and divestitures, cash cost management, and operational practices. Combined with the much-improved macro backdrop, the sector finds itself in an enviable position to deliver meaningful free cash flow at current price levels."

RBC analyst Michael Harvey, who covers intermediate-sized oil and gas companies, said in a report that he expects first quarter cash flow per share for oil-weighted producers will be 39 per cent higher quarter-over-quarter, while gas-weighted producers will report a 45 per cent rise, "driven by broad strength in commodity prices."

The end of Alberta's mandatory crude quota program in December means that oilsands producers will show a "significant uptick" in production in the first quarter, said CIBC analysts in a report. Canada's discount to the U.S. benchmark oil price is likely to shrink in April and May, the CIBC report said, as planned maintenance shutdowns take at least 500,000 barrels of western Canadian crude per day offline.

The analysts expect the cash stockpiles to be used for debt reduction and balance sheet repair after a year of COVID-19 induced shock, rather than a rush into capital spending, although they expect a recent consolidation trend to continue.

That's consistent with the message presented by Alex Pourbaix, CEO of oilsands producer Cenovus Energy Inc., who said earlier this month the company would use expected higher oil prices this year to pay down debt in the wake of its $3.8-billion takeover of Husky Energy Inc.

"We are going to be basically paying all of our free cash onto our balance sheet until we get to $10 billion (in net debt) but ultimately I'd like to get significantly lower ... something in the range of $8 billion," said Pourbaix at an investor symposium.

"As we move from 10 to eight, we'll start to consider returning cash to shareholders or maybe modest growth."



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US, China agree to co-operate on climate crisis with urgency

Co-operating on climate

The United States and China, the world’s two biggest carbon polluters, agreed to co-operate to curb climate change with urgency, just days before President Joe Biden hosts a virtual summit of world leaders to discuss the issue.

The agreement was reached by U.S. special envoy for climate John Kerry and his Chinese counterpart Xie Zhenhua during two days of talks in Shanghai last week, according to a joint statement.

The two countries “are committed to co-operating with each other and with other countries to tackle the climate crisis, which must be addressed with the seriousness and urgency that it demands,” said the statement, issued Saturday evening U.S. time.

Meeting with reporters in Seoul on Sunday, Kerry said the language in the statement is “strong” and that the two countries agreed on “critical elements on where we have to go.” But the former secretary of state said, “I learned in diplomacy that you don’t put your back on the words, you put on actions. We all need to see what happens.”

China is the world’s biggest carbon emitter, followed by the United States. The two countries pump out nearly half of the fossil fuel fumes that are warming the planet’s atmosphere. Their co-operation is key to the success of global efforts to curb climate change, but frayed ties over human rights, trade and China’s territorial claims to Taiwan and the South China Sea have been threatening to undermine such efforts.

Noting that China is the world’s biggest coal user, Kerry said he and Chinese officials had a lot of discussions on how to accelerate a global energy transition. “I have never shied away from expressing our views shared by many, many people that it is imperative to reduce coal, everywhere,” he said.

Su Wei, a member of the Chinese negotiation team, told state broadcaster CCTV on Sunday that a major accomplishment of the talks was “restarting the dialogue and co-operation between China and the United States on climate change issues.” Su said the two countries reached a consensus on key areas for future co-operation on climate issues.

Biden has invited 40 world leaders, including Chinese President Xi Jinping, to the April 22-23 summit. The U.S. and other countries are expected to announce more ambitious national targets for cutting carbon emissions ahead of or at the meeting, along with pledging financial help for climate efforts by less wealthy nations.

It’s unclear how much Kerry’s China visit would promote U.S.-China co-operation on climate issues.

While Kerry was still in Shanghai, Chinese Vice Foreign Minister Le Yucheng signalled Friday that China is unlikely to make any new pledges at next week’s summit.

“For a big country with 1.4 billion people, these goals are not easily delivered,” Le said during an interview with The Associated Press in Beijing. “Some countries are asking China to achieve the goals earlier. I am afraid this is not very realistic.”

During a video meeting with German and French leaders Friday, Xi said that climate change “should not become a geopolitical chip, a target for attacking other countries or an excuse for trade barriers,” the official Xinhua News Agency reported.

On whether Xi would join the summit, Le said “the Chinese side is actively studying the matter.”

The joint statement said the two countries “look forward to” next week’s summit. Kerry said Sunday that “we very much hope that (Xi) will take part” in the summit but it’s up to China to make that decision.

Biden, who has said that fighting global warming is among his highest priorities, had the United States rejoin the historic 2015 Paris climate accord in the first hours of his presidency, undoing the U.S. withdrawal ordered by his predecessor Donald Trump.

Major emitters of greenhouse gases are preparing for the next U.N. climate summit taking place in Glasgow, U.K., in November. The summit aims to relaunch global efforts to keep rising global temperatures to below 1.5 degrees Celsius (2.7 degrees Fahrenheit) as agreed in the Paris accord.

According to the U.S.-China statement, the two countries would enhance “their respective actions and co-operating in multilateral processes, including the United Nations Framework Convention on Climate Change and the Paris Agreement.”

It said both countries also intend to develop their respective long-term strategies before the Glasgow conference and take “appropriate actions to maximize international investment and finance in support of” the energy transition in developing countries.

Xi announced last year that China would be carbon-neutral by 2060 and aims to reach a peak in its emissions by 2030. In March, China’s Communist Party pledged to reduce carbon emissions per unit of economic output by 18% over the next five years, in line with its goal for the previous five-year period. But environmentalists say China needs to do more.

Biden has pledged the U.S. will switch to an emissions-free power sector within 14 years, and have an entirely emissions-free economy by 2050. Kerry is also pushing other nations to commit to carbon neutrality by then.



No bubble tea this spring? Canada faces boba shortage amid shipping delays

No bubble tea this spring?

Canada is experiencing a shortage of the tapioca pearls or boba used in bubble tea as shipping delays continue to affect the global supply chain.

A Vancouver-based supplier of bubble tea products says boba supply is currently "running thin" and is causing concern among bubble tea cafés as demand grows with warmer weather.

Bubble Tea Canada, which provides wholesale supplies to companies in Alberta, Quebec and Ontario, says the shortage is caused by the pandemic, coupled with the obstruction of the Suez Canal last month after a container ship blocked the trade route.

Spokesman Greg Tieu says most Canadian wholesalers get bubble tea supplies from Asia, particularly from Taiwan, where the popular drink originated.

He says the backlog has caused wholesale prices to go up and the business has started limiting purchase quantities.

Tieu says the shortage has been going on for at least two weeks and it could take months to catch up.





'I wish I could get the vaccine tomorrow': Grocery workers struggle with anxiety

Grocery workers struggle

Grocery store workers are struggling with heightened stress and anxiety as they remain on the front lines of a surge in COVID-19 infections in Canada’s hot spot areas, industry watchers say.

Despite being deemed essential and continuing to go into work as stay-at-home orders are renewed, most supermarket employees have yet to receive a vaccine or a pay boost.

"I wish I could get the vaccine tomorrow," said Karen Ekstrom, a Real Canadian Superstore employee in Calgary, who has worked as a cashier for 22 years.

"I think all the grocery clerks should get one because I lost count of how many cases I've had in my store."

Ekstrom is a member of the United Food and Commercial Workers union,which is calling on provinces to legislate sick days and pandemic pay and vaccinate members that can't work from home sooner.

They say these workers are going to work scared and stressed and quick action is needed to protect them from a third wave ravaging several provinces unable to contain the spread of the virus.

“They’ve been prioritized and they should be vaccinated by July — but we think it should be faster,” said Tim Deelstra, a spokesman for the United Food & Commercial Workers union.

“There's a lot of stress and anxiety that they have to deal with in terms of going to work. We get reports everyday of workers who are getting sick with COVID-19.”

Ekstrom knows those scares well. Her store was recently hit with an outbreak that affected all but four workers on the overnight shift, between those that contracted COVID and others forced to isolate. The store had to borrow staff from other locations.

The supermarket tests its workers for the virus every week, but Ektrom said, it has sometimes had to boost the frequency to every day, when COVID-19 scares are numerous.

While Ekstrom feels safe wearing a mask and stationed behind Plexiglas at the checkout, some customers try to get behind the barrier and others have to be reminded about distancing and how to wear a mask, if they wear one at all.

Many don't take the reminders well.

"The management team at my store have been fantastic, but the customers are terrible and they're just getting worse and worse," Ekstrom said.

"I learned to defend myself with this whole pandemic, so I've learned to tell the customers 'I'm here to help you not for you to be rude to me and abuse me.'"

On top of quicker access to vaccine, she wishes enforcement authorities would patrol stores more often to increase safety.

Meanwhile, other grocery workers and unions are seeking compensation.

Some supermarket workers in regions under lockdown are set to receive a bonus or gift card in recognition of the increased hazard they face working with the public.

For example, Metro Inc. said it’s offering gift cards of up to $300 to about 45,000 front-line workers in Ontario and Quebec while Sobeys Inc. brought back pay bonuses in lockdown areas.

But many grocery store employees have yet to see a pandemic pay raise reinstated during the current stay-at-home order.

The low wages and insufficient full-time hours have led to chronic high turnover in the industry, said Kimberly Bowman, senior projects manager with the Brookfield Institute for Innovation and Entrepreneurship, a policy think-tank based at Ryerson University.

“A huge challenge is both the rate of pay and the number of hours available,” she said. “Many grocery store workers start around minimum wage and might be asked to be available for 40 to 50 hours a week but only get scheduled for 20 of those hours.”

The grocery workers that remain end up cobbling together hours at multiple jobs to get by, Bowman said.

“We’ve heard from grocery workers, especially in the Toronto and Hamilton areas, that are working two or three jobs, or doing Instacart or Uber Eats deliveries on the side to make ends meet.”

Bowman is leading a research project into food retail employment, interviewing about two dozen supermarket workers and surveying hundreds more across Ontario over the past year.

Many of the grocery employees she interviewed described brainstorming ways to keep customers and staff safe during the pandemic by problem solving potential bottlenecks or issues in the store, she said.

“I was impressed by the invisible work that went on by workers trying to keep themselves and the public safe,” Bowman said.

While workers appreciated the pay bonuses, she said the raises were an inconsistent patchwork across the industry and that many said receiving recognition from their manager, co-workers and the public was almost as important.

“They want to be treated fairly and feel valued and respected for a job well done,” Bowman said.

“Almost as much as we heard talk of hero pay or bonus pay, we heard about the importance of simple acts of recognition,” she said.

“A manager who was understanding about scheduling difficulties and willing to make accommodations seemed nearly as important to some.”



Loonie reaches 80 cents US in late-morning trading, S&P/TSX composite climbs higher

Loonie reaches 80 cents US

The loonie climbed to 80 cents US in late-morning trading as Canada's main stock index rose, helped by gains in the base metals sector.

The S&P/TSX composite index was up 24.21 points at 19,346.13.

In New York, the Dow Jones industrial average was up 125.55 points at 34,161.54. The S&P 500 index was up 9.68 points at 4,180.10, while the Nasdaq composite was down 12.21 points at 14,026.55.

The Canadian dollar traded for 80.00 cents US compared with 79.81 cents US on Thursday.

The June crude oil contract was down 47 cents at US$63.04 per barrel and the May natural gas contract was up a penny at US$2.67 per mmBTU.

The June gold contract was up US$13.80 at US$1,780.60 an ounce and the May copper contract was down three cents at US$4.19 a pound.



Analysts say CRTC ruling will help regional carriers with new limits on Big Three

New limits on Big Three?

Some telecommunications analysts and consumer advocates say the country's regional wireless and internet carriers will benefit the most from a landmark regulatory ruling Thursday by the CRTC.

Analyst reports say two of Canada's publicly traded mid-sized regional telecommunications groups will likely have more room to grow, given the CRTC's new restrictions on BCE's Bell Canada, Rogers Communications Inc. and Telus Corp.

But analysts from RBC Capital Markets and Canaccord Genuity say the three big national wireless carriers will likely be able to manage new the CRTC rules, which were announced Thursday.

One of Canada's most outspoken consumer advocacy groups, OpenMedia, criticized the CRTC for putting too much emphasis on the regional carriers, doing too little to limit the market power of the Big Three and very little to help new entrants to the wireless markets.

Analysts took a more favourable view of the CRTC decision, noting that Quebecor's Videotron will have more options to strengthen its base in Quebec or buy assets in other provinces and Cogeco Communications may be able to advance its strategic goal of adding wireless to its internet and cable TV networks in Ontario and Quebec

Most observers, including the CRTC, say the future for Shaw Communications and its Freedom Mobile subsidiary in Ontario, Alberta and B.C. is more difficult to predict because of a proposed takeover by Rogers.



Statistics Canada says wholesale sales fell 0.7 per cent in February

Wholesale sales fall

Statistics Canada says wholesale sales fell 0.7 per cent in February to $68.8 billion, the second drop in three months.

The drop followed a gain of 4.0 per cent in January.

The agency says sales were lower in four of the seven subsectors, led by building material and supplies, and motor vehicle and motor vehicle parts and accessories.

The building material and supplies subsector fell 6.1 per cent in February as housing starts in Canada fell for a third consecutive month and U.S. housing starts hit a six-month low.

Sales of motor vehicles and motor vehicle parts and accessories dropped 2.5 per cent in February as automakers continued to deal with a shortage of computer chips used in a wide range of vehicles.

In volume terms, wholesale sales fell 1.2 per cent in February.



CRTC to allow smaller wireless players better access to national networks

Smaller networks to be let in

Canada's biggest wireless network operators suffered a major setback Thursday as the CRTC issued orders that will make it easier for smaller rivals to compete, which in turn will likely reduce costs for mobile phone users.

The federal telecom regulator adopted a number of recommendations that consumer groups and smaller telecom businesses pursued, arguing it should be less expensive for emerging operators to connect to national wireless networks on a wholesale basis.

The CRTC says regional networks that meet certain standards will be able to operate as a "mobile virtual network operators" — or MVNOs — in areas where competition is limited.

That means they pay wholesale for access to the major networks while maintaining a distinct customer base.

The CRTC has also given Bell, Rogers and Telus — plus government-owned SaskTel — three months to provide more affordable plans for seniors, low-income earners and people who use mobile phones sparingly.

So far, the Big Three have been staunch opponents of MVNOs — which they portray as businesses seeking the benefits of a national network without paying into the cost of building and maintaining expensive infrastructure.

"While there are encouraging signs that prices are trending downwards, we need to accelerate competition and more affordable options for Canadians," CRTC chairman Ian Scott said in a statement.

Asked in an interview whether average Canadians will actually see prices come down more quickly, Scott said he thinks they will — but some types of consumer and some markets will see more of a change than others do.

"Not all rates come down at the same speed. Not all regions have the same experience," Scott said.

"Quebec has lower wireless rates than anywhere else in the country, on average. Why? Because Videotron has been a really effective competitor throughout most of the province. That's what we want to replicate everywhere."

OpenMedia, however, said the "toothless" CRTC decision "guarantees more unaffordable cellphone prices for Canada."

Laura Tribe, who heads the national consumer advocacy group, said the CRTC had missed a huge opportunity for to stimulate competition from smaller players.

"It really doubles down on the idea that a regional provider will be sufficient to correct the extreme market share that Bell, Telus and Rogers have," Tribe said in an interview.

Videotron, which is owned by Quebecor Inc., is one of the regional operators. Others include privately owned Eastlink that has a wireless network in Atlantic Canada, and SaskTel, which is owned by the Saskatchewan government.

Calgary-based Shaw Communications Inc., owner of Freedom Mobile, has been Canada's fourth-largest carrier — operating in Ontario, Alberta and B.C., but its future is in doubt after it agreed last month to be purchased by Rogers.

The Rogers-Shaw deal is subject to various federal approvals, including by the CRTC, but an all-party committee of MPs has heard opponents warn that any "fourth carrier" could be bought up and stop being independent.

Statements issued by Bell and Telus after the CRTC decision said little about its details but emphasized they are already working to provide good, affordable service to Canadians.

"As we study the decision and consider our options, Bell’s focus remains on serving our wireless customers with a full range of affordable pricing options," Nathan GIbson said in an email.

"Telus is continuing to review today’s CRTC decision in detail," said Richard Gilhooey in an email.

"We continue to leverage our vast network infrastructure to bridge the digital and socio-economic divides with our low cost, high speed internet and Mobility for Good programs to support low income Canadian seniors, families, and youth," Gilhooey concluded

A statement wasn't immediately available from Rogers.



WestJet CEO Ed Sims finds Air Canada aid package 'bittersweet'

WestJet eyes AirCan deal

WestJet CEO Ed Sims says the federal government's aid package for Air Canada could be "problematic" unless his company gets equitable treatment, as talks over pandemic relief continue between Ottawa and Canadian carriers.

In a memo obtained by The Canadian Press, Sims tells employees the government is now the fourth-largest shareholder in their biggest competitor, spurring him to insist on comparable terms at the negotiating table.

He says it was "bittersweet" to learn of a pandemic relief deal that grants Air Canada up to $5.4 billion in loans plus a six per cent equity stake in the company in exchange for pledges to refund passengers, restore regional routes and maintain current job levels.

Sims says he is asking the government for new aircraft financing, domestic tourism stimulus and supply-chain reform to avoid price hikes of the sort imposed on carriers by Canada's civil air navigation service last year.

Finance Minister Chrystia Freeland said Monday that talks continue with Canadian airlines, including WestJet.

Travel restrictions introduced through the beginning of the COVID-19 pandemic have been catastrophic for the airline sector, as passenger numbers and profits plummeted and tens of thousands of workers lost their jobs.



Toyota recalls Venza SUVs to fix air bag wiring problem

Toyota recalls Venza SUVs

Toyota is recalling nearly 280,000 Venza SUVs in the U.S. because a wiring problem can stop the side air bags from inflating in a crash.

The recall covers Venzas from the 2009 through 2015 model years. Documents posted Thursday by the U.S. National Highway Traffic Safety Administration say wires to the air bag sensor in the driver's side door can become damaged with regular use.

That could stop the side and curtain air bags from deploying when needed.

Toyota said in documents that it received 31 field reports and 56 warranty claims in the U.S. due to the problem.

Toyota will inspect the wires and replace them if needed at no cost to owners. The recall is expected to start May 31.



$1.2 billion loss for Delta Airlines, but recovery on the radar

Delta Airlines loses $1.2B

Delta Air Lines lost $1.2 billion in the first quarter, more than expected, but executives said Thursday that the airline could be profitable by late summer if the budding recovery in air travel continues.

CEO Ed Bastian said Thursday that ticket sales have been stronger in the last two weeks than at any time since the pandemic hit the U.S. last year. So far most of the people boarding planes are vacationers booking trips to mountains, beaches and resorts.

The increase in passengers, combined with lower costs for labour and fuel, helped Delta generate $4 million in cash per day in March after burning cash for the past year.

“It’s clear that our business is turning the corner and we’re moving into an active recovery phase,” Bastian said in an interview. “We see the business continuing to improve as consumer confidence grows.”

However, Delta shares fell 2% in morning trading.

Several airlines have reported that bookings began to pick up in February and gained speed in March. Delta’s bookings doubled from January to March, with U.S. leisure sales recovering to 85% of pre-pandemic levels.

Airlines are adding flights for the summer vacation season in the expectation that passengers will show up. American Airlines said Wednesday that it expects to run about 90% of its U.S. pre-pandemic schedule this summer.

The only threat Bastian sees to the recovery is a resurgence of the virus. Delta’s view – that it sees “a path to profitability in the September quarter” – assumes that the U.S. will reach so-called herd immunity and slow the spread of COVID-19 by late spring or early summer.

As bookings rise, Delta on May 1 will stop blocking middle seats, a policy it adopted in the early days of the pandemic to reassure nervous flyers. This week, the U.S. Centers for Disease Control and Prevention published a study estimating that leaving middle seats empty reduces the risk of COVID-19 transmission by up to 57%.

Airline industry officials faulted the study, which didn’t consider face masks and vaccinations, and Bastian said it will not cause Delta to reconsider selling every seat.

“We said all along we will sell those middle seats when customers are confident and comfortable sitting there, and the science has given us that confidence around the vaccinations,” he said. “What we’re seeing now in April is our planes are pretty full, so we need to sell those middle seats.”

Delta relies heavily on corporate travel, which remains deeply depressed, but the airline expects that to bounce back by late summer or fall. Bastian said 75% of Delta’s corporate-account customers say they expect to be fully vaccinated by Memorial Day, which he believes will set the stage for road warriors to return in large numbers.

International travel will come back more slowly. Bastian said that if governments ease restrictions, travel between the U.S. and the United Kingdom could recover quickly, but significant travel to continental Europe, Asia and South America is probably six months to a year away.

U.S. airlines are looking to bounce back from the worst year in their history. Delta lost more than $12 billion in 2020, much of it in restructuring charges, but is recovering thanks in large part to more than $11 billion in federal pandemic-relief cash and loans. The company reduced labour costs by persuading thousands of workers to take buyouts or early retirement last year.

Without the federal aid and other non-repeating items, Delta’s first-quarter loss would have been $2.9 billion. The adjusted loss was $3.55 per share. Wall Street expected Delta to lose $3.13 per share, according to a FactSet survey of 17 analysts.

Revenue fell 60% from a year ago, to $4.15 billion, topping analysts’ expectation of $3.94 billion.

Delta is the first U.S. airline to report results first-quarter results. All the others are expected to post losses too. Analysts believe that Allegiant Air, a smaller airline geared to leisure travel, will be the first sizeable U.S. carrier to turn a profit, but not until the second quarter.



US jobless claims plunge to 576,000, lowest since pandemic

US jobless claims plunge

The number of Americans applying for unemployment benefits tumbled last week to 576,000, a post-COVID low and a hopeful sign that layoffs are easing as the economy recovers from the pandemic recession.

The Labor Department said Thursday that applications plummeted by 193,000 from a revised 769,000 a week earlier. Jobless claims are now down sharply from a peak of 900,000 in early January and well below the 700,000-plus level they had been stuck at for months.

The decline in unemployment claims coincides with other evidence that the economy is strengthening as vaccinations accelerate, pandemic business restrictions are lifted in many states and Americans appear increasingly willing to travel, shop, eat out and otherwise spend again. In March, employers added a healthy 916,000 jobs, the most since August, and the unemployment rate fell to 6%, less than half the pandemic peak of 14.8%.

Other healthy economic data was reported Thursday, underscoring that a potential boom, much-anticipated by economists, may be getting under way. Trillions of dollars of government stimulus, including $1,400 checks largely distributed last month, have maintained overall household income despite widespread job losses in the pandemic.

Those checks, supplemented by higher savings that many households have managed to build, drove retail sales sharply higher in March. Sales at stores, car dealers, restaurants and bars jumped 9.8%. It was the biggest gain since retail sales soared 18% in May of last year in a partial bounce-back from the virus’ initial blow.

“Today’s report shows just how willing American consumers are to spend when the means and options are available," said Maria Solovieva, an economist at TD Bank. “Fast vaccination and removal of restrictions burst the spending floodgates wide open.”

For the week ending March 27, 16.9 million people were continuing to collect unemployment benefits, down from 18.2 million in the previous week. That decline suggests that some of the unemployed are being called back to jobs.

Yet the still-high number of ongoing recipients shows that even as the economy has improved in recent weeks, millions are facing a loss of a job or income and have been struggling to pay bills or rent. The last time the jobless rate was this low, weekly claims were around 350,000, still well below their current level.

Economists point to a range of potential explanations. Some states are still struggling to clear backlogs of applications from previous weeks. As a result, jobless claims being reported now may stem from layoffs that occurred weeks ago. Other states are also facing what they suspect is a sizable number of fraudulent claims for unemployment aid.

Another possible factor is that under President Joe Biden’s $1.9 trillion rescue package, the federal government is now supplementing weekly jobless benefits by $300 a week — on top of the average state unemployment payment of about $340 — through September. That extra money may be encouraging more people to request unemployment aid.



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