loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation costs and toys.

Americans found themselves with a lot of money in the bank, and as they spent that money on goods, demand collided with a global supply chain that was too fragile to catch up.

Virus outbreaks shut down factories, ports faced backlogs and a dearth of truckers roiled transit routes. Americans still managed to buy more goods than ever before in 2021, and foreign factories sent a record sum of products to U.S. shops and doorsteps. But all that shopping wasn’t enough to satisfy consumer demand.

stop spending at the start of the pandemic helped to swell savings stockpiles.

And the Federal Reserve’s interest rates are at rock bottom, which has bolstered demand for big purchases made on credit, from houses and cars to business investments like machinery and computers. Families have been taking on more housing and auto debt, data from the Federal Reserve Bank of New York shows, helping to pump up those sectors.

But if stimulus-driven demand is fueling inflation, the diagnosis could come with a silver lining. It may be easier to temper consumer spending than to rapidly reorient tangled supply lines.

People may naturally begin to buy less as government help fades. Spending could shift away from goods and back toward services if the pandemic abates. And the Fed’s policies work on demand — not supply.

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Omicron Is Turning Europe’s Busy Season Silent

“You could feel Christmas was coming,” Amanda Whiteside, a manager at Gordon’s Wine Bar in London, said of the crowds and buzz. “And then it was gone.”

Throughout Britain and in other parts of Europe, new government restrictions combined with heightened anxiety over the highly contagious Omicron variant of the coronavirus have drastically reduced business at restaurants, pubs, event venues and stores, prompting urgent calls for additional government assistance.

In Britain, the government responded Tuesday, announcing 1 billion pounds ($1.3 billion) in aid for the hospitality industry, with one-time grants of £6,000 and rebates for employees’ sick leave.

The additional assistance was promised as a fresh wave of anxiety over the economy washes over the region. In France, government ministers announced Tuesday additional aid up to 12 million euros for travel agencies, events, caterers and indoor leisure companies that suffer big operating losses this month.

Spain, the government has scheduled an emergency meeting with regional leaders on Wednesday to discuss whether to adopt new restrictions. Italy’s government is meeting on Thursday.

“We are in a different phase now where lockdown will be potentially more costly,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. “Up until now, we’ve been used to lockdowns followed by support from the government. I think that will be the case as well, but support will be more conditional, less comprehensive than before.”

Britain recorded the highest number of Covid-19 cases in Europe over the last seven days, according to the World Health Organization.

On Monday, organizations representing more than 100,000 businesses around the country sent an open letter to Prime Minister Boris Johnson, demanding more tax relief and grants to tide them over.

new requirements that customers must show proof of vaccination or recent recovery. And in the Netherlands, where the government announced a lockdown over the weekend, calls to the nation’s business registry asking for help climbed past 400 on Monday — seven times the number logged the previous Monday.

known as Plan B, on Dec. 8 as a response to Omicron, cancellations have been rolling in and foot traffic has disappeared in some areas.

At Gordon’s Wine Bar, it was common to find every table in its cavelike cellar and on its outdoor patio full and a long line of customers waiting. Then Plan B was put in place.

The drop-off, said Ms. Whiteside, the administrative manager, “was very dramatic.”

Customers thinned out, and several staff members got Covid, she said. Gordon’s is now offering only outside service, and Ms. Whiteside estimates that sales are down 25 percent.

Half a mile away, in Soho, the Coach and Horses pub was similarly contending with fewer customers and sick staff. Last week, business was off by a third, while on Monday it fell “off the edge of a cliff,” said Alison Ross, the manager.

Kaasbar Utrecht, is shuttered, and $100,000 at the cafe. Plans to rebuild a nightclub he owns that was burned in a fire in January have been postponed. He has had to let go most of his 80-person staff and is now trying to make money selling mulled wine in the streets and cheese packages door to door.

Mr. Waseq said that because he opened his business after the pandemic began and did not have 2019 sales to use as a benchmark comparison, he was not eligible for government assistance.

Ron Sinnige, a spokesman for the national business registry, the Kamer van Koophandel, said the agency was flooded with calls this week asking about financial assistance, advice or liquidating their operations. Some were seeking guidance on how to qualify as an essential business — could a clothing store sell candy and soda, could a beauty salon offer postsurgical massages or list Botox injections as a medical procedure?

The questions were a sign of people’s creativity and despair, Mr. Sinnige said. “As opposed to previous lockdowns, people are really at the end of their financial flexibility and emotional flexibility,” he said.

France has canceled a menu of year-end celebrations and barred tourists from Britain, a blow to the ski industry.

On Tuesday, the Swedish government imposed some new restrictions that included allowing only seated customers to be served in restaurants and bars.

Ireland imposed an early curfew of 8 p.m. on restaurants and bars that began on Monday, while limiting attendance at events.

In Denmark, restaurants and bars must cut off serving alcohol after 10 p.m., and a slate of venues and event spaces including ​​theaters, museums, zoos, concert halls and Tivoli, Copenhagen’s landmark amusement park, have been closed.

Switzerland’s restrictions that bar unvaccinated people from going to restaurants, gyms and museums are expected to last until Jan. 24.

In Germany, the check-in process at stores, which requires stopping everyone at the door and asking to see vaccination certification and an ID, was deterring shoppers at what would normally be the busiest time of the year, the German Trade Association said.

Retailers surveyed by the group reported a 37 percent drop in sales from Christmas 2019.

“After months of lockdowns, the restrictions are once again bringing many retailers to the edge of their existence,” said Stefan Genth, head of the Trade Association.

A court in the northern state of Lower Saxony last week threw out the restrictions there, after the Woolworth department store chain challenged them on grounds that they were not fairly applied and that requiring shoppers to wear masks provided sufficient protection. The ruling on Thursday raised hopes that other states would follow its lead, giving a final boost to last-minute shoppers.

“Last weekend was better, but overall the shopping season has been more than depressing,” said Mark Alexander Krack, head of the Lower Saxony Trade Association.

Eshe Nelson contributed reporting.

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Workers in Europe Are Demanding Higher Pay as Inflation Soars

PARIS — The European Central Bank’s top task is to keep inflation at bay. But as the cost of everything from gas to food has soared to record highs, the bank’s employees are joining workers across Europe in demanding something rarely seen in recent years: a hefty wage increase.

“It seems like a paradox, but the E.C.B. isn’t protecting its own staff against inflation,” said Carlos Bowles, an economist at the central bank and vice president of IPSO, an employee trade union. Workers are pressing for a raise of at least 5 percent to keep up with a historic inflationary surge set off by the end of pandemic lockdowns. The bank says it won’t budge from a planned a 1.3 percent increase.

That simply won’t offset inflation’s pain, said Mr. Bowles, whose union represents 20 percent of the bank’s employees. “Workers shouldn’t have to take a hit when prices rise so much,” he said.

Inflation, relatively quiet for nearly a decade in Europe, has suddenly flared in labor contract talks as a run-up in prices that started in spring courses through the economy and everyday life.

reached 4.90 percent, a record high for the eurozone.

Austrian metalworkers wrested a 3.6 percent pay raise for 2022. Irish employers said they expect to have to lift wages by at least 3 percent next year. Workers at Tesco supermarkets in Britain won a 5.5 percent raise after threatening to strike around Christmas. And in Germany, where the European Central Bank has its headquarters, the new government raised the minimum wage by a whopping 25 percent, to 12 euros (about $13.60) an hour.

fell for the first time in 10 years in the second quarter from the same period a year earlier, although economists say pandemic shutdowns and job furloughs make it hard to paint an accurate picture. In the decade before the pandemic, when inflation was low, wages in the euro area grew by an average of 1.9 percent a year, according to Eurostat.

The increases are likely to be debated this week at meetings of the European Central Bank and the Bank of England. E.C.B. policymakers have insisted for months that the spike in inflation is temporary, touched off by the reopening of the global economy, labor shortages in some industries and supply-chain bottlenecks that can’t last forever. Energy prices, which jumped in November a staggering 27.4 percent from a year ago, are also expected to cool.

interview in November with the German daily F.A.Z., adding that it was likely to start fading as soon as January.

In the United States, where the government on Friday reported that inflation jumped 6.8 percent in the year through November, the fastest pace in nearly 40 years, officials are not so sure. In congressional testimony last week, the Federal Reserve chair, Jerome H. Powell, stopped using the word “transitory” to describe how long high inflation would last. The Omicron variant of the coronavirus could worsen supply bottlenecks and push up inflation, he said.

In Europe, unions are also agitated after numerous companies reported bumper profits and dividends despite the pandemic. Companies listed on France’s CAC 40 stock index saw margins jump by an average of 35 percent in the first quarter of 2021, and half reported profits around 40 percent higher than the same period a year earlier.

raised in October by 2.2 percent.

Crucially, executives also agreed to return to the bargaining table in April if a continued upward climb in prices hurts employees.

At Sephora, the luxury cosmetics chain owned by LVMH Moët Hennessy Louis Vuitton, some unions are seeking an approximately 10 percent pay increase of €180 a month to make up for what they say is stagnant or low pay for employees in France, many of whom earn minimum wage or a couple hundred euros a month more.

€44.2 billion in the first nine months of 2021, up 11 percent from 2019, raised wages at Sephora by 0.5 percent this year and granted occasional work bonuses, said Jenny Urbina, a representative of the Confédération Générale du Travail, the union negotiating with the company.

Sephora has offered a €30 monthly increase for minimum wage workers, and was not replacing many people who quit, straining the remaining employees, she said.

“When we work for a wealthy group like LVMH no one should be earning so little,” said Ms. Urbina, who said she was hired at the minimum wage 18 years ago and now earns €1,819 a month before taxes. “Employees can’t live off of one-time bonuses,” she added. “We want a salary increase to make up for low pay.”

Sephora said in a statement that workers demanding higher wages were in a minority, and that “the question of the purchasing power of our employees has always been at the heart” of the company’s concerns.

At the European Central Bank, employees’ own worries about purchasing power have lingered despite the bank’s forecast that inflation will fade away.

A spokeswoman for the central bank said the 1.3 percent wage increase planned for 2022 is a calculation based on salaries paid at national central banks, and would not change.

But with inflation in Germany at 6 percent, the Frankfurt-based bank’s workers will take a big hit, Mr. Bowles said.

“It’s not in the mentality of E.C.B. staff to go on strike,” he said. “But even if you have a good salary, you don’t want to see it cut by 4 percent.”

Léontine Gallois contributed reporting from Paris.

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How Omicron Could Knock Economic Recovery Off Track

LONDON — This week, Marisha Wallace finally had to admit that her planned five-day ski holiday in Switzerland in mid-December was not salvageable: The Swiss government’s sudden decision to impose a 10-day quarantine on some international travelers meant she wouldn’t be able to leave her hotel or return home to London on her scheduled flight.

“It’s the way of the world right now,” said Ms. Wallace, an actress and a singer. “You can’t plan anymore.”

That provisional state, amplified across the world, has left the still-fragile economy in a state of suspense as spiking coronavirus infections and the new variant Omicron have popped up around the globe.

“There’s no way to know how bad it will get,” said Ángel Talavera, head of European economics at Oxford Economics.

report released Wednesday from the Organization for Economic Cooperation and Development showed, although growth has been uneven, the world economy this year bounced back more quickly and strongly than had been anticipated. The report, compiled largely before the latest coronavirus news, nevertheless warned that growth was projected to slow: in the eurozone, to 4.3 percent next year from 5.2 percent in 2021; and in the United States, to 3.7 percent in 2022 from 5.6 percent.

The organization characterized its outlook as “cautiously optimistic.” But it reiterated how much economic fortunes are inextricably tied to the coronavirus: “The economic policy priority is to get people vaccinated,” the report concluded.

a fourth wave of infections transformed Europe into a Covid hot spot and prompted new restrictions like lockdowns in the Netherlands and Austria.

During earlier outbreaks, trillions in government assistance helped quickly resuscitate the struggling U.S. and European economies. It also brought some unexpected side effects. Combined with pent-up demand, that support helped produce a shortage of labor and materials and rising inflation.

Given how much debt was racked up in the past 18 months, such aid is unlikely to recur even with a sharp downturn — and neither are wholesale closures. Vaccines provide some protection, and many people say they are unwilling to go back into hibernation.

People and business alike have shifted into a wait-and-see mode. “A lot of things do seem like they are on hold, like labor market or overall consumption decisions,” said Nick Bunker, director of economic research for the job site Indeed.

How that will affect unemployment levels and inflation rates is unclear. Jerome H. Powell, the Federal Reserve chair, indicated on Tuesday that concern about stubborn inflation was growing. The O.E.C.D. also warned that inflation could be higher and last longer than originally anticipated.

Omicron’s appearance just adds to the uncertainty, Laurence Boone, the organization’s chief economist, said in an interview.

governments have reacted with a confusing hodgepodge of stern warnings, travel bans, mask mandates and testing rules that further cloud the economic outlook. That patchwork response combined with people’s varying tolerance for risk means that, at least in the short term, the virus’s latest swerves will have a vastly different effect depending on where you are and what you do.

In France, Luna Park, an annual one-month amusement fair held in the southern city of Nice and slated to open this weekend, was called off after the government suddenly requisitioned the massive warehouse where roller coasters, shooting galleries and merry-go-rounds were being set up in order to convert the space to an emergency vaccination center.

“Today I find myself trying to save my company, and I’m not sure that I can,” said Serge Paillon, park’s owner. He feared he would face huge losses, including 500,000 euros (about $566,000) he had already invested in the event, as well as refunds for tickets that had been on sale for several months

Mr. Paillon furloughed 20 employees. Another 200 festival workers who were coming from around the country to manage the 60 games and rides were told to stay home.

“For a year and a half, it was already a disaster,” Mr. Paillon said. “And now it’s starting again.”

Israel’s decision on Saturday to shut its borders to all foreign tourists for two weeks is likely to reduce the number of tourists in Israel and the occupied territories this December by up to 40,000, or nearly 60 percent of what was expected, according to a government estimate.

Wiatt F. Bowers, an urban planner, had planned to leave Jacksonville, Fla., for Tel Aviv on Wednesday but had to cancel — the fifth time in 18 months that he had to scrap a planned trip to Israel. He will rebook, but doesn’t know when.

Foreign tourism, which brought a record 4.55 million tourists to Israel in 2019, had already nearly vanished. Between March 2020 and September 2021, nonresident foreigners were barred from entering Israel — and, by extension, the occupied territories, where entry and exit are controlled by Israel.

In Bethlehem, where tourism is the main industry, income consequently fell more than 50 percent, said the mayor, Anton Salman, in a phone interview.

Elias al-Arja, the chief of the Arab Hotel Association, which represents about 100 Palestinian hotels in the occupied territories, said he was concerned less about the short-term effect of the sudden travel ban than about the long-term message of unpredictability it sent to potential visitors.

“The disaster isn’t the groups who canceled over the next two weeks,” Mr. al-Arja said. “How can I convince people to come to the Holy Land after we promised them that you can come, but then the government closes the border?”

Reluctance to travel, though, could mean an upswing in other sectors if the new variant is not as harmful as people fear. Jessica Moulton, a senior partner at McKinsey & Company in London, said previous spending patterns during the pandemic showed that some money people would otherwise use for travel would instead be spent on dining.

She estimated that the roughly $40 billion that British consumers saved on travel last summer was used for shopping and eating out.

At the moment, Ms. Moulton said, “to the extent that Omicron decreases travel, which will happen as we head into Christmas, that will benefit restaurants.”

In Switzerland, where travelers from Britain and 22 other countries must now quarantine, the effect of the policy change on hotels was immediate.

“The majority of travelers from England — between 80 to 90 percent — have already canceled,” said Andreas Züllig, head of HotellerieSuisse, the Swiss hotel association.

Ms. Wallace, who canceled her trip to the Cambrian Hotel in Adelboden, was one of several people who changed their reservations at the hotel after the Swiss government made its announcement on Friday, just one week before the slopes open.

“This obviously has an impact on our very important winter and Christmas business,” said Anke Lock, the Cambrian’s manager, who estimated that 20 percent of the hotel’s December bookings were at risk.

For now, though, most guests are watching and waiting, Ms. Lock said: “We’ve changed the bookings from guaranteed to tentative.”

Extreme uncertainty about the economy may turn out to be the only certainty.

Patrick Kingsley contributed reporting from Jerusalem, Melissa Eddy from Berlin and Léontine Gallois from Paris.

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German Elections Live Updates: Social Democrats Have Narrowly Beaten Merkel’s Party

preliminary official results reported early Monday.

The federal German election agency posted the results at 4:30 a.m. local time.

The close outcome means the Social Democrats, with only 25.7 percent of the vote, must team up with other parties to form a government. And in the complex equation that can be required in Germany to form a government, it is possible that if the winning party fails to get others on board, the party that placed second could wind up leading the country.

It could take weeks if not months of haggling to form a coalition, leaving Europe’s biggest democracy suspended in a kind of limbo at a critical moment when the continent is still struggling to recover from the pandemic and France — Germany’s partner at the core of Europe — faces divisive elections of its own next spring.

Sunday’s election signaled the end of an era for Germany and for Europe. For over a decade, Ms. Merkel was not just chancellor of Germany but effectively the leader of Europe. She steered her country and the continent through successive crises and in the process helped Germany become Europe’s leading power for the first time since World War II.

Cheers erupted at the Social Democratic Party’s headquarters when the exit polls were announced early Sunday evening. A short while later, supporters clapped and chanted “Olaf! Olaf!” as Olaf Scholz, their candidate, took the stage to address the crowd.

“People checked the box for the S.P.D. because they want there to be a change of government in this country and because they want the next chancellor to be called Olaf Scholz,” he said.

The campaign proved to be the most volatile in decades. Armin Laschet, the candidate of Ms. Merkel’s Christian Democrats, was long seen as the front-runner until a series of blunders compounded by his own unpopularity eroded his party’s lead. Olaf Scholz, the Social Democratic candidate, was counted out altogether before his steady persona led his party to a spectacular 10-point comeback. And the Greens, who briefly led the polls early on, fell short of expectations but recorded their best result ever.

The Christian Democrats’ share of the vote collapsed with only 24.1 percent of the vote, heading toward the worst showing in their history. For the first time, three parties will be needed to form a coalition — and both main parties are planning to hold competing talks to do so.

Nevertheless, Mr. Laschet appeared at his party headquarters an hour after the polls closed, declaring the outcome “unclear” and vowing to try to form a government even if his party came in second.

Credit…Pool photo by Clemens Bilan

The progressive, environmentalist Greens appeared to make significant gains since the 2017 election but seemed to fall short of having a viable shot at the chancellery. That positions the Greens, as well as the business-friendly Free Democrats, to join the next government. They will play a key role in deciding what the next German government could look like, depending on which of the larger parties they would like to govern with.

On the outer edge of the political spectrum, support for the far-right Alternative for Germany, or AfD, appeared roughly unchanged, while the Left party appeared to be hovering on the 5 percent threshold needed to win seats in Parliament.

In mid-October the election agency will present the official final results.

Credit…Michele Tantussi/Reuters

BERLIN — What do a traffic light, the Jamaican flag and a kiwi have in common?

Those watching German politics closely will know all three are nicknames for potential governing coalitions.

In the weeks following the election, the parties will try to form a coalition government that has a majority in the German Parliament. The winning party in the election will have the first chance to try to form that coalition, but if it doesn’t succeed the chance goes to the runner up.

For the first time since the founding of the federal republic 72 years ago, it looks as though it will take at least three parties to form a stable government.

Here’s how things might play out:

Traffic Light Coalition 🚦: This could be the most likely combination. Its name derives from the parties that would be included, the Social Democrats (red), the free market liberal Free Democrats (yellow) and the Greens (uh, green).

Jamaica Coalition 🇯🇲: If Chancellor Angela Merkel’s conservative Christian Democratic Union (black) should take the lead, Germany might be looking at a Jamaica coalition — named after the black, green and yellow of the Jamaican flag. That bloc would consist of the conservatives, the Greens and the Free Democrats.

And the kiwi 🥝? That would be a duo of the conservatives and the Greens, who have worked together in several state governments, but on current polling are unlikely to command a national majority.

Given the relatively low polling of the once-mighty Christian Democrats and Social Democrats, the topic of possible coalitions has dominated news coverage for weeks in Germany. For the past five years, the two big parties have governed Germany together in a “Grand Coalition,” but they don’t want to repeat that and it might not have a majority in any case.

The Social Democrats and the Greens have governed Germany together before — a prosaically named “Red-Green coalition” was in power from 1997 until 2005 — and have signaled their willingness to work together again. But this time they are not expected to win the seats necessary to get a majority on their own.

Seeing their popularity slip, Merkel’s conservatives and much of the conservative media have warned that an ascendant Social Democrats would turn to the far-left party, Die Linke, to round out their numbers.

Credit…Pool photo by Tobias Schwarz

They call it the “Elephant Round”: After the polls close and as the votes are being counted on Sunday, all of the heavy-hitting party leaders sit down together, live on public television, to discuss the outcome that is shaping up.

Those who are winning will exclaim, those who are losing will explain and smaller parties will jockey for position in a new government, cozying up to potential partners or coolly shunning others.

For Germans watching at home, the event, which is scheduled to start at 8:15, is a chance to read the tea leaves about their future government.

For the politicians sitting in the brightly lit studio, the round offers them a chance to try to set the tone for the weeks of negotiations that are expected to follow, given that none of the parties running are expected to win enough votes to allow them to govern alone. Leaders of the smaller parties use the opportunity to make their first demands and draw their lines in the sand.

It is a chance for grandstanding and, occasionally, for grinning. That happened famously in 2005, when Chancellor Gerhard Schröder’s Social Democrats lost by a small margin to Angela Merkel’s Christian Democratic Union. He nevertheless tried to claim victory, on grounds that his party had done much better than predicted in the polls. “We’ve won,” Ms. Merkel replied with a controlled smile. “And after a couple of days of reflection, the Social Democrats will realize that, too.”

This year, fate may be in the favor of the Social Democrats. Ms. Merkel is stepping aside after 16 years in power and Olaf Scholz, her vice chancellor and finance minister, led the polls in the final weeks of the race. His campaign portrayed him as coolheaded and in control. Come Sunday night, Germans will be watching to see whether he can keep that up when faced with the “elephants.”

In Germany, political parties name their candidates for chancellor before campaigning begins, and most of the focus falls on the selections who have a realistic chance of winning.

Traditionally, those have been the candidates of the center-right Christian Democrats (Chancellor Angela Merkel’s party) and those of the center-left Social Democrats. For the first time this year, the candidate for the environmentalist Greens is viewed as having a real shot at the chancellery.

Here are the leading hopefuls:

Credit…Laetitia Vancon for The New York Times

Age: 40

Current position: Co-leader of the Green Party

About her: Ms. Baerbock aims to shake up the status quo. She is challenging Germans to deal with the crises that Ms. Merkel has left largely unattended: decarbonizing the powerful automobile sector; weaning the country off coal; and rethinking trade relationships with strategic competitors like China and Russia.

“This election is not just about what happens in the next four years, it’s about our future,” Ms. Baerbock told a crowd in Bochum, a western German town, this summer.

Ms. Baerbock, who has not a position in government, has started off on a promising note, but her campaign has struggled as she has been a frequent target of disinformation efforts. She has also been accused by rivals of plagiarism and of padding her résumé, and her Green Party has been faulted for not being able to capitalize on environmental issues in the wake of flooding this summer.

Even so, there is almost no combination of parties imaginable in the next coalition government that does not include the Greens. That makes Ms. Baerbock, her ideas and her party of central importance to Germany’s future.

“We need change to preserve what we love and cherish,” she told the crowd in Bochum. “Change requires courage, and change is on the ballot on Sept. 26.”

Credit…John Macdougall/Agence France-Presse — Getty Images

Age: 60

Current position: Leader of the Christian Democratic Union; governor of the state of North Rhine-Westphalia

About him: Mr. Laschet has run North Rhine-Westphalia, Germany’s most populous state, since 2017 — a credential he has long said qualifies him to run the country. As the leader of the Christian Democratic Union, Ms. Merkel’s party, he should have been the natural heir to the chancellor. But his gaffe-prone campaign has struggled to find traction among Germans. Extraordinary flooding this summer in the region he runs exposed flaws in his environmental policies and disaster management. He was caught on camera laughing during a solemn ceremony for flood victims.

But Mr. Laschet is known for comebacks, and for surviving blunders.

Among his influences is his faith. At a time when more and more Germans are quitting the Roman Catholic Church, Mr. Laschet is a proud member. Another influence is Aachen, Germany’s westernmost city, where he was born and raised. Growing up in a place with deep ties to Belgium and the Netherlands, Mr. Laschet has been integrated into the larger European ideal all of his life.

Credit…Gordon Welters for The New York Times

Age: 63

Current position: Vice chancellor of Germany and federal finance minister

About him: When Olaf Scholz asked his fellow Social Democrats to nominate him as their candidate for chancellor, some inside his own camp publicly wondered if the party should bother fielding a candidate at all. What a difference a few months make. Today, Mr. Scholz and his once moribund party have unexpectedly become the favorites to lead the next government.

During the campaign, Mr. Scholz has managed to turn what has long been the main liability for his party — co-governing as junior partners of Ms. Merkel’s conservatives — into his main asset: In an election with no incumbent, he has styled himself as the incumbent — or as the closest thing there is to Ms. Merkel.

“Germans aren’t a very change-friendly people, and the departure of Angela Merkel is basically enough change for them,” said Christiane Hoffmann, a prominent political observer and journalist. “They’re most likely to trust the candidate who promises that the transition is as easy as possible.”

He has been photographed making the chancellor’s hallmark diamond-shaped hand gesture — the “Merkel rhombus” — and used the female form of the German word for chancellor on a campaign poster to convince Germans that he could continue Ms. Merkel’s work even though he is a man.

The symbolism isn’t subtle, but it is working — so well in fact that the chancellor herself has felt compelled to push back on it — most recently in what might be her last speech in the Bundestag.

Credit…Laetitia Vancon for The New York Times

It has been said that Germans are sometimes so organized that chaos reigns. Germany’s election system is no exception. It is so complex that even many Germans don’t understand it.

Here’s a brief primer.

Not exactly. Unlike in the United States, voters don’t directly elect their head of government. Rather, they vote for representatives in Parliament, who will choose the next chancellor, but only after forming a government. More on that later.

The major parties declare who they would choose for chancellor, so Germans going to the polls today know who they are in effect voting for. This year the candidates most likely to become chancellor are Olaf Scholz of the Social Democrats or Armin Laschet of the Christian Democrats. Annalena Baerbock, a Green, has an outside chance.

Any German citizen 18 or over. They don’t need to register beforehand.

Everyone going to the polls today has two votes. The first vote is for a candidate to be the district’s local representative. The second vote is for a party. Voters can split their votes among parties and often do. For example, a person could cast one vote for a Social Democrat as the local member of Parliament, and a second vote for the Christian Democrats as a party.

Parliament has 598 members, but could wind up with many more because of a quirk in the system. The top vote-getter in every district automatically gets a seat in Parliament. These candidates account for half of the members of Parliament. The remaining seats are allocated according to how many second votes each party receives.

But parties may be allocated additional seats according to a formula designed to ensure that every faction in Parliament has a delegation that accurately reflects its national support. So Parliament could easily wind up with 700 members.

Also: A party that polls less than 5 percent doesn’t get any seats at all.

It is very unlikely that any party will wind up with a majority in Parliament. The party that gets the most votes must then try to form a government by agreeing to a coalition with other parties. That has become mathematically more difficult because of the rise of the far-right Alternative for Germany party and the far-left Linke party.

The mainstream parties have ruled out coalitions with either of those parties because of their extreme positions. But it will be a struggle for the remaining parties to find enough common ground to cobble together a majority. The process could take months.

Credit…Lena Mucha for The New York Times

Voter turnout in Germany — as a measure of the people visiting polling stations — was down on Sunday when compared to the last election in 2017, officials said. But the number is misleading. Participation could be extraordinarily high once mail-in ballots are counted.

By 2 p.m., 37 percent of eligible voters had cast ballots in person, election officials said, down from 41 percent during the same period in 2017. But at least 40 percent of Germans were expected to vote by mail because of the coronavirus, potentially pushing turnout above the 76 percent recorded in 2017.

Despite the decrease in in-person voting nationwide, there were long lines at polling stations in Berlin, where voters were also choosing candidates for the local government. Some polling places reportedly ran out of ballots and had trouble getting more because many streets were closed because of the Berlin Marathon, which was expected to attract almost 30,000 participants.

With Chancellor Angela Merkel poised to step down after 16 years in office, the stakes are high. Polls showed a close race between the Social Democrats and the Christian Democratic Union, Ms. Merkel’s party, which could encourage turnout. Voting sites remain open until 6 p.m. local time.

The high number of mail-in ballots is not expected to delay the results in the same way that occurred in the United States presidential elections last year, when close races in some states were not decided for days. German officials will only count mail-in ballots that had arrived by Sunday, and should have a good idea by midnight at the latest of which party prevailed.

Credit…Pool photo by Martin Divisek

The Alternative for Germany, or AfD, which shocked the nation four years ago by becoming the first far-right party to win seats in Parliament since World War II, suffered a slippage in support Sunday but also solidified its status as a permanent force to be reckoned with.

“We are here to stay, and we showed that today,” Tino Chrupalla, co-leader of the party, told party members gathered on the outskirts of Berlin.

Early results showed the party with 11 percent of the votes, down from almost 13 percent in 2017. The AfD is likely to no longer be the largest opposition party in Parliament.

If those results hold in final tallies, that will still give the AfD a sizable delegation in Parliament, and the vote showed that the party has a core constituency even when immigration, its main issue, was not a major topic in the campaign.

At the AfD’s post-election gathering Sunday, activists took comfort in the poor showing by the Christian Democrats, the party of Chancellor Angela Merkel, who compete with the AfD for conservative voters. “The C.D.U. got what they deserved,” said Alexander Gauland, the leader of the AfD delegation in Parliament.

Alternative for Germany held its election party at an event space 45 minutes by subway from central Berlin, perhaps in an effort to discourage counter-demonstrators. Several dozen protesters gathered across the street from the AfD event, holding signs accusing the party of being fascist. But they were probably outnumbered by the police.

As AfD activists ate potato salad and wurst from a buffet, the prevailing view seemed to be that the party’s candidates would have done better if the media and the other parties hadn’t ganged up on them.

“We had to campaign against everyone,” said Daniela Öeynhausen, who appears to have won a seat in the state Parliament of Brandenburg. “It was still an impressive two-digit result considering the unfair attacks.”

Julian Potthast, who said he believed he had won election to a district council in a neighborhood of Berlin, portrayed the party — whose rhetoric has been linked to attacks on immigrants or people perceived as non-Germans — as itself the victim of violence. He said that his vehicle was vandalized and that graffiti was sprayed on his home.

The party was unfairly portrayed as fascist, he complained. But he also conceded the party might have made mistakes, for example in its stance against restrictions to limit the spread of the coronavirus. “It’s not as good as we hoped,” Mr. Potthast said. “We have to look very carefully at why we lost votes.”

Credit…Thomas Kienzle/Agence France-Presse — Getty Images

Chancellor Angela Merkel will not disappear Sunday night after the votes are counted.

Until a new government is formed, a process that can take several weeks to several months, she will remain in office as head of the acting, or caretaker, government.

Ms. Merkel announced in the fall of 2018 that she would not run again and she gave up leadership of her party, the Christian Democratic Union. After that, her position as chancellor was weakened as members of the C.D.U. jockeyed to replace her. She had hoped to stay out of the election campaign, but as the conservative candidate, Armin Laschet, started to flounder, she made several appearances aimed at bolstering support for him.

Ms. Merkel is expected to try to take a similarly hands-off approach to steering the caretaker government — if world events allow. The last two years of her fourth and final term in office has seen the deadly coronavirus pandemic, what she herself has called “apocalyptic” flooding in western Germany and the chaotic withdrawal from Afghanistan.

Once the new chancellor is sworn in, Ms. Merkel will vacate her office in the imposing concrete building that dominates Berlin’s government district for good.

But, after the last election, in 2017, it took 171 days — or nearly six months — to form a new government, which means she is likely to be around for a while.

What she will do next remains to be seen. In response to that question in repeated interviews, she has said that first and foremost she will take some time off to reflect and reorient herself before making her next move.

“I will take a break and I will think about what really interests me, because in the past 16 years, I haven’t had the time to do that,” she said in July, after receiving an honorary doctorate from Johns Hopkins University.

“Then I will maybe read a bit, and then my eyes might close because I am tired and I will sleep a bit,” she said, with a smile: “And then we’ll see where I emerge.”

Credit…Sebastian Kahnert/picture alliance, via Getty Images

BERLIN — German election officials are expecting mail-in ballots to break records in Sunday’s federal election. At least 40 percent and possibly a majority of ballots will arrive by mail, according to Georg Thiel, head of the agency in charge of counting the votes.

Although actual tallies will only be known after polls close, the authorities have seen requests for mail-in ballots grow this year as the pandemic fuels anxiety about crowded polling stations.

Mail-in balloting has been permitted in Germany for more than 60 years. When it was first allowed, in the 1957 election, only 5 percent of voters used the option; during the last federal election in 2017, 29 percent chose to mail in their choice. Vote counters are set up to handle a doubling of that number — nearly 60 percent — this year, Mr. Thiel said.

The postal service in Germany is one of the quickest and most reliable in the world, with letters usually delivered within a day to anywhere in the country. Still, an official warned voters last week that if they wanted their ballot to be counted, it should be in the mail by Thursday; only ballots received by 6 p.m. on Sunday — when polls close — will be tallied.

The populist Alternative for Germany party, segments of which have parroted former President Donald J. Trump’s claims of manipulated mail-in ballots in the U.S., has used slogans like “the mailbox is not a ballot box” to try to dissuade voters from using the option. But those concerns do not appear to have resonated with the electorate.

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The new Parliament will ultimately determine who succeeds Angela Merkel, who has served as chancellor for 16 years. Early exit polling has suggested a tight race between the Christian Democratic Union, Ms. Merkel’s center-right party, and the center-left Social Democrats.CreditCredit…Lena Mucha for The New York Times

Sixty million people are eligible to vote in the German national election on Sunday. There won’t be a new government that night, or the next day — it could take the rival parties weeks or even months to settle on a coalition with a parliamentary majority. But the ballots are tallied quickly, and the new shape of Germany’s political landscape is likely to be visible within hours.

Here’s what Election Day will look like, and what to watch for.

8 a.m. local time: Polls opened. Candidates are not allowed to campaign on this day, but some may be seen casting ballots.

6 p.m. (noon Eastern): Polling stations close. Not long after, the first exit polls should be available. These polls can be within percentage points of the final result. But this year, because the race is tight, it could be a few more hours before a clear picture emerges. Mail-in ballots, which have been part of Germany’s voting system since 1957, are expected to play an outsized role given the pandemic, as they did in the U.S. presidential election. Only mail-in ballots received by 6 p.m. Sunday will be counted.

Around 6:15 p.m.: The first projections based on actual counted ballots will be released. These get updated throughout the evening until a fairly clear picture emerges of which party is winning.

8:15 p.m.: The heads of all the major parties meet to discuss successes and failures of their campaigns, and they will signal who they would be willing to work with in a coalition government. This discussion is called the “Elephant Round,” and it lasts an hour.

8 p.m. to midnight: Nearly all votes should be counted.

Early, early morning: The election authorities release something they call the official temporary results. These usually come between 2 a.m. and 3 a.m. — though during the last national election, they didn’t arrive until 5:30 a.m.

Credit…Bernd von Jutrczenka/Picture Alliance, via Getty Images

During her 16 years as Germany’s chancellor, Angela Merkel has become an international avatar of calm, reason and democratic values for the way she handled crises that included a near financial meltdown of the eurozone, the arrival of more than a million migrants and a pandemic.

Today Germany is an economic colossus, the engine of Europe, enjoying prosperity and near full employment despite the pandemic. But can it last?

That is the question looming as Ms. Merkel prepares to leave the political stage after national elections on Sunday. There are signs that Germany is economically vulnerable, losing competitiveness and unprepared for a future shaped by technology and the rivalry between the United States and China.

During her tenure, economists say, Germany neglected to build world-class digital infrastructure, bungled a hasty exit from nuclear power, and became alarmingly dependent on China as a market for its autos and other exports.

The China question is especially complex. Germany’s strong growth during Ms. Merkel’s tenure was largely a result of trade with China, which she helped promote. But, increasingly, China is becoming a competitor in areas like industrial machinery and electric vehicles.

Economists say that Germany has not invested enough in education and in emerging technologies like artificial intelligence and electric vehicles. Germans pay some of the highest energy prices in the world because Ms. Merkel pushed to close nuclear power plants, without expanding the country’s network of renewable energy sources enough to cover the deficit.

“That is going to come back to haunt Germany in the next 10 years,” said Guntram Wolff, director of Bruegel, a research institute in Brussels.

Credit…Lena Mucha for The New York Times

WÜLFRATH, Germany — Hibaja Maai gave birth three days after arriving in Germany.

She had fled the bombs that destroyed her home in Syria and crossed the black waters of the Mediterranean on a rickety boat with her three young children. In Greece, a doctor urged her to stay put, but she pressed on, through Macedonia, Serbia, Hungary and Austria. Only after she had crossed the border into Bavaria did she relax and almost immediately go into labor.

“It’s a girl,” the doctor said when he handed her the newborn bundle.

There was no question in Ms. Maai’s mind what her daughter’s name would be.

“We are calling her Angela,” she told her husband, who had fled six months earlier and was reunited with his family two days before little Angela’s birth on Feb. 1, 2016.

“Angela Merkel saved our lives,” Ms. Maai said in a recent interview in her new hometown, Wülfrath, in northwestern Germany. “She gave us a roof over our heads, and she gave a future to our children. We love her like a mother.”

Chancellor Angela Merkel is stepping down after her replacement is chosen following Germany’s Sept. 26 election. Her decision to welcome more than a million refugees from Syria, Iraq, Afghanistan and elsewhere in 2015 and 2016 stands as perhaps the most consequential moment of her 16 years in power.

It changed Europe, changed Germany, and above all changed the lives of those seeking refuge, a debt acknowledged by families who named their newborn children after her in gratitude.

The chancellor has no children of her own. But in different corners of Germany, there are now 5- and 6-year-old girls (and some boys) who carry variations of her name — Angela, Angie, Merkel and even Angela Merkel. How many is impossible to say. The New York Times has identified nine, but social workers suggest there could be far more, each of them now calling Germany home.

Credit…Clemens Bilan/EPA, via Shutterstock

Never before has the issue of climate change played such a role in a German election.

Though it still remained unclear who will lead Germany, nearly every party pledged to put climate change near the top of the agenda for the next government.

Despite entering office in 2005 with ambitions to reduce carbon emissions, four successive governments under Chancellor Angela Merkel failed to significantly reduce Germany’s carbon footprint. It remains in the top 10 of the world’s most polluting countries, according to the World Bank.

It has been young climate activists who have succeeded in bringing the climate debate to the forefront of Germany’s political discussion. This year, they successfully took the government to court, forcing a 2019 law aimed at bringing the country’s carbon emissions down to nearly zero by 2050 to be reworked with more ambitious and detailed goals to reduce emissions through 2030.

On Friday, people of all ages marched through the center of Berlin, then rallied on the lawn before the Reichstag, where Germany’s Parliament meets. Thousands turned out for similar protests in other cities across the country.

They were joined by Greta Thunberg, the 18-year-old climate activist who started the Fridays for Future protests in Stockholm in 2018 by skipping school as a way of shaming the world into addressing climate change, made a guest appearance at a protest in Berlin. Future Fridays were a staple in Germany until the pandemic hit.

“Yes, we must vote and you must vote, but remember that voting will not be enough,” she told the crowd, urging them to stay motivated and keep up the pressure on politicians.

“We can still turn this around. People are ready for change,” she said. “We demand the change and we are the change.”

Credit…Fabian Bimmer/Reuters

BERLIN — In the prelude to Sunday’s federal election, one of the strangest questions faced by Armin Laschet, governor of Germany’s most populous state and one of the front-runners, was what his dragon name would be.

Mr. Laschet, apparently nonplused, exhaled loudly. “No idea,” he answered. “What kind of names do dragons have?”

As the vote neared and the competition to replace Chancellor Angela Merkel increasingly turned on the candidates’ characters, the contenders submitted themselves to an exhaustive schedule of interviews, debates and town hall-style discussions — including some inquiries from children. In fact, many of the most memorable moments were prompted by the younger questioners.

On one program, “Can You Do the Chancellery,” each of the main candidates was given 30 minutes to teach a classroom of 8- to 13-year-olds. During their separate sessions leading the class, candidates answered questions and had to explain complex themes (like global taxation or global warming) on a whiteboard.

Pauline and Romeo, the children who asked Mr. Laschet about dragons, were part of a segment on a late-night talk show. The two, both 11, threw Mr. Laschet no softballs. Among other things, they asked if he was planning on quitting smoking (a question he dodged, though he did offer that he did not inhale) and about a far-right candidate in his party.

When the 10-minute segment aired this month, Mr. Laschet was widely panned for his performance. (Two other candidates, Annalena Baerbock of the Greens and Olaf Scholz of the Social Democrats, survived Pauline and Romeo without making any headlines.)

But Mr. Laschet was not the only one to struggle. Tino Chrupalla, co-chairman of the populist Alternative for Germany party, also had a tough time with a younger interrogator.

In a publicly broadcast interview, Mr. Chrupalla told a teenage reporter called Alexander that his party wanted to see more German poems and songs being taught in classrooms. But when Alexander asked him what his favorite German poem was, Mr. Chrupalla struggled to name one.

Credit…Wolfgang Rattay/Reuters

Unusually long lines at polling stations on Sunday caused several Berlin voting locations to remain open for hours after the 6 p.m. closing deadline. That extension may add hours to the time it will take Germany to tally the votes.

The culprit seems to have been a combination of higher-than-expected in-person voting, missing or wrong ballots, and a road-blocking marathon that delayed restocking supplies.

Paco Mallia, 18, who looked forward to voting for the first time, turned back when he saw the long line at his polling station in the central neighborhood of Moabit on Sunday morning.

When he returned just before closing time, the line remained long, but an election worker assured Mr. Mallia that he would get to vote.

At other polling stations in the city, handwritten notes informed voters that as long as they stood in line by 6 p.m. they could cast a ballot.

Mr. Mallia decided to stay. “This election is kind of a big deal for me,” he said.

Although delays were reported in other jurisdictions, Berlin — where residents also voted in state and local elections — seems to have been hardest hit.

Dirk Behrendt, a Green Party city official, demanded an investigation into the delays.

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Stocks Rebound as Wall Street Shakes Off Inflation Worries: Live Updates

manufacturing activity in the United States and Europe showed a rapid pickup, as did retail sales data from Britain.

The Stoxx Europe 600 rose 0.6 percent led by gains in consumer companies. One of the biggest gainers was Richemont, the Swiss luxury goods company that owns brands including Cartier and Montblanc. Richemont shares rose after the company reported its full-year results with strong growth in sales in Asia especially for its jewelry and watch brands.

Oil prices rose. Futures of West Texas Intermediate, the U.S. crude benchmark, rose 1.4 percent to $63.48 a barrel.

There are many ways to measure how much the economy has reopened after pandemic lockdowns. One offbeat way is to compare the share prices of Clorox to Dave & Buster’s.

Nick Mazing, the director of research at the data provider Sentieo, came up with this metric to gauge shifts in postpandemic activity. The higher Clorox’s share price rises relative to Dave & Buster’s, the more people appear to be staying home and disinfecting everything than going out to crowded bars.

By this measure, the DealBook newsletter reports, conditions have nearly returned to prepandemic levels — indeed, Dave & Buster’s recently lifted its sales forecast, as nearly all of its beer-and-arcade bars have reopened.

Two more ratios that Mr. Mazing suggest comparing are Netflix versus Live Nation and Peloton versus Planet Fitness.

The first is also nearly back to where it was before the pandemic: Live Nation is preparing for a packed concert schedule, selling tickets to people who may have already binge-watched all of “Below Deck.”

The second, however, suggests that people aren’t as eager to get back to huffing and puffing at the gym as they are content to exercise at home. As restrictions lift and people feel safer in crowds, drinking and dancing appear to be higher priorities.

George Greenfield, the founder of CreativeWell, a literary agency in Montclair, N.J., applied for a loan in March with Biz2Credit. The initial amount he was offered was less than a quarter of what he was eligible for.
Credit…Ed Kashi for The New York Times

The government’s $788 billion relief effort for small businesses ravaged by the coronavirus pandemic, the Paycheck Protection Program, is ending as it began, with the initiative’s final days mired in chaos and confusion.

Millions of applicants are seeking money from the scant handful of lenders still making the government-backed loans. Hundreds of thousands of people are stuck in limbo, waiting to find out if they will receive their approved loans — some of which have been stalled for months because of errors or glitches. Lenders are overwhelmed, and borrowers are panicking, The New York Times’s Stacy Cowley reports.

The relief program had been scheduled to keep taking applications until May 31. But two weeks ago, its manager, the Small Business Administration, announced that the program’s $292 billion in financing for forgivable loans this year had nearly run out and that it would immediately stop processing most new applications.

Then the government threw another curveball: The Small Business Administration decided that the remaining money, around $9 billion, would be available only through community financial institutions, a small group of specially designated institutions that focus on underserved communities.

A roll of steel is packaged and labeled.
Credit…Taylor Glascock for The New York Times

The American steel industry is experiencing a comeback that few would have predicted even months ago.

Steel prices are at record highs and demand is surging as businesses step up production amid an easing of pandemic restrictions. Steel makers have consolidated in the past year, allowing them to exert more control over supply. Tariffs on foreign steel imposed by the Trump administration have kept cheaper imports out. And steel companies are hiring again, The New York Times’s Matt Phillips reports.

It’s not clear how long the boom will last. This week, the Biden administration began discussions with European Union trade officials about global steel markets. Some steel workers and executives believe that could lead to an eventual pullback of the Trump-era tariffs, which are widely credited for spurring the turnaround in the steel industry.

Record prices for steel are not going to reverse decades of job losses. Since the early 1960s, employment in the steel industry has fallen more than 75 percent. More than 400,000 jobs disappeared as foreign competition grew and as the industry shifted toward production processes that required fewer workers. But the price surge is delivering some optimism to steel towns across the country, especially after job losses during the pandemic pushed American steel employment to the lowest level on record.

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Europe’s economy is expected to shrink while the U.S.’s grows.

European authorities will release data on Friday that is widely expected to show another economic downturn over the first three months of the year as the still-raging pandemic has prompted governments to extend lockdowns.

Coming a day after the United States disclosed that its economy expanded 1.6 percent over the same period — a robust 6.4 percent annualized rate — the expected European contraction presents a contrast of fortunes on opposite sides of the Atlantic.

Propelled by dramatic public expenditures to stimulate growth, as well as swift increases in vaccination rates, the United States — the world’s largest economy — expanded rapidly during the first months of 2021. At the same time, the 19 nations that share the euro currency were likely caught in the second part of a so-called double-dip recession, reflecting far less aggressive stimulus spending and a botched effort to secure vaccines.

But economic growth figures represent a snapshot of the past, and recent weeks have produced encouraging signs that Europe is on the mend. Even as Covid-19 spreads alarmingly in major economies like Germany and France, factories have revived production, while growing numbers of people are on the move in cities.

European Union’s recent deal to secure doses from Pfizer.

In depriving households of the opportunity to spend, the pandemic has yielded savings — money that may surge into businesses as fear of the virus fades.

Most economists and the European Central Bank expect the eurozone to expand at a blistering pace over the rest of 2021, yielding growth of more than 4 percent for the full year.

International Monetary Fund. That compares to 10 percent in Germany.

But Europe also began the crisis with far more comprehensive social safety net programs. While the United States directed cash to those set back by the pandemic, Europe limited a surge in unemployment.

“Europe has more insurance schemes,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Oslo. “You don’t fall as hard, but you don’t rebound that sharply either.”

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U.S. Economy Rebounds as Pain Caused by Pandemic Eases: Live Updates

the first-quarter growth rate was 6.4 percent.

2019 Q4 LEVEL

$20 trillion

+1.6%

FROM

PRIOR

QUARTER

Gross domestic product,

adjusted for inflation and

seasonality, at annual rates

2019 Q4 LEVEL

$20 trillion

+1.6%

FROM

PRIOR

QUARTER

Gross domestic product, adjusted for inflation

and seasonality, at annual rates

“This was a great way to start the year,” said Gregory Daco, chief U.S. economist at Oxford Economics. “We had the perfect mix of improving health conditions, strong fiscal stimulus and warmer weather.”

“Consumers are now back in the driver’s seat when it comes to economic activity, and that’s the way we like it,” he added. “A consumer that is feeling confident about the outlook will generally spend more freely.”

Looking ahead, economists said they expected to see even better numbers this quarter.

“It’s good news, but the better news is coming,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “There’s nothing in this report that makes me think the economy won’t grow at a gangbusters pace in the second and third quarter.”

The expansion last quarter was spurred by stimulus checks, he said, which quickly translated into purchases of durable goods like cars and household appliances.

“This demonstrates the value of government intervention when the economy is on its knees from Covid,” he added. “But in the coming quarters, the economy will be much less dependent on stimulus as individuals use the savings they’ve accumulated during the pandemic.”

Cumulative percent change in

G.D.P. from the start of the

last five recessions

Final quarter

before

recession

5 quarters

into recession

Cumulative percent change in G.D.P.

from the start of the last five recessions

Final quarter

before

recession

5 quarters

into recession

Overall economic activity should return to prepandemic levels in the current quarter, Mr. Anderson said, while cautioning that it will take until late 2022 for employment to regain the ground it lost as a result of the pandemic.

Still, the labor market does seem to be catching up. Last month, employers added 916,000 jobs and the unemployment rate fell to 6 percent, while initial claims for unemployment benefits have dropped sharply in recent weeks.

Tom Gimbel, chief executive of LaSalle Network, a recruiting and staffing firm in Chicago, said: “It’s the best job market I’ve seen in 25 years. We have 50 percent more openings now than we did pre-Covid.”

Hiring is stronger for junior to midlevel positions, he said, with strong demand for professionals in accounting, financing, marketing and sales, among other areas. “Companies are building up their back-office support and supply chains,” he said. “I think we’re good for at least 18 months to two years.”

Spending on goods like automobiles led the way in the first quarter, but demand for services like dining out should revive in the second quarter, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “I think we will see a surge in services spending,” she said.

As more Americans become vaccinated, many economists expect a decline in new unemployment claims.
Credit…James Estrin/The New York Times

Initial jobless claims fell last week to yet another pandemic low in the latest sign that the economic recovery is strengthening.

About 575,000 people filed first-time claims for state unemployment benefits last week, the Labor Department said Thursday, a decrease of 9,000 from the previous week’s revised figure. It was the third straight week that jobless claims had dropped.

In addition, 122,000 new claims were filed for Pandemic Unemployment Assistance, a federal program that covers freelancers, part-timers and others who do not routinely qualify for state benefits. That was a decline of 12,000 from the previous week.

Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 553,000.

“Today’s report, and the other data that we got today, signals an improving labor market and an improving economy,” said Daniel Zhao, senior economist with the career site Glassdoor. “It is encouraging that claims are continuing to fall.”

Although weekly jobless claims remain above levels reached before the pandemic, vaccinations and warmer weather are offering new hope. Most economists expect the slow downward trend in claims to continue in the coming months as the economy reopens more fully.

But challenges lie ahead. The long-term unemployed — a group that historically has had a more difficult time rejoining the work force — now make up more than 40 percent of the total number of unemployed. Of the 22 million jobs that disappeared early in the pandemic, more than eight million remain lost.

“The labor market is definitely moving in the right direction,” said AnnElizabeth Konkel, an economist at the online job site Indeed. She noted that job postings as of last Friday were up 22.4 percent from February 2020.

Still, she cautioned that industries like tourism and hospitality would probably remain depressed until the pandemic was firmly under control. She also stressed that child care obligations might be preventing people ready to return to work from seeking jobs.

“We still are in a pandemic — the vaccinations are ramping up but there is that public health factor still,” Ms. Konkel said. “We’re not quite there yet.”

The NBC sitcom “The Office” became a big streaming hit for Netflix and is now back in the Comcast fold, available on its streaming service Peacock.
Credit…Chris Haston/NBC

If you want a clear picture of the state of the media industry in upheaval, Comcast offers a good snapshot.

The company, which includes NBC, Universal Pictures, several theme parks, and the Peacock streaming service, beat Wall Street’s expectations in its first-quarter earnings report on Thursday as it continued to shift its emphasis from cable to digital.

To start, take these figures from its results:

Despite the regular pace of cord cutting, Comcast’s cable television business pulled in over $5.62 billion in revenue for the first quarter. That was flat compared with last year, but it’s still the company’s biggest business, accounting for a fifth of all revenue.

Peacock, on the other hand, is the fastest growing, but it loses the most money. Last year, it approached $700 million in pretax losses. This year, the streaming platform is expected to lose $1.3 billion as Comcast spends big to load it up with original shows and sports programming with the aim of attracting more viewers.

That’s the operating thesis behind every major media company today: replace the eroding base of profit-rich cable customers with loss-making streaming viewers in the hope that over time the digital audience will become more valuable. The Walt Disney Company, ViacomCBS, Discovery Inc. and AT&T’s WarnerMedia are all trying to make the transformation without entirely losing their shirts.

Peacock’s 42 million sign-ups should also come with an asterisk. The service is free and easy to join, but that doesn’t mean everyone is watching. (The figure includes paid versions of Peacock, which feature more content and fewer commercials.) A February report from the tech news site The Information revealed that a little more than 11 million households were watching the service.

Even so, the aim of Peacock is to replace the lost advertising from Comcast’s cable and broadcast channels as people continue to cut the cord. Peacock, which is available nearly everywhere, can also act as a hedge against other cable operators such as Charter or Cox when Comcast’s media division, NBCUniversal, negotiates carriage fees.

Peacock offers some of the most popular streaming shows, including “The Office,” a top hit on Netflix before it lost the rights to the series in 2021 when the license expired and the show reverted back to its owner, Comcast.

In a few years, Peacock will have the rights to stream National Football League games on Sunday alongside NBC as part of a new agreement. That could ruffle feathers with some of NBC’s affiliate stations if viewers drop TV and opt for Peacock to watch football. The streamer will also have some games exclusively. In March, the service added WWE.

Comcast sells something that has proved more durable than sports and entertainment: broadband, the piping that carries all streaming platforms. The company saw a surge in subscribers during the pandemic. In the first quarter, sales increased 12 percent to $5.6 billion. It’s likely to overtake cable television as the company’s biggest business.

At NBCUniversal, sales sharply dropped as movie theaters remained mostly shut and fewer people were visiting theme parks under the pandemic. Revenue fell 9 percent to $7 billion and pretax profit decreased 12 percent to $1.5 billion. Advertising at its television networks, which include NBC, MSNBC and Syfy, fell 3.4 percent to $2.1 billion.

Overall, the company beat expectations, reporting adjusted profit of 76 cents a share on $27.2 billion in revenue, and its stock was climbing on Thursday morning. Investors were looking for 59 cents in per-share profit and $26.6 billion in sales.

Microsoft will decrease the share of money it charges independent developers that publish computer games on its online store, starting in August, the company said on Thursday.

Developers will keep 88 percent of the revenue from their games, up from 70 percent. That could make Microsoft’s store more attractive to independent studios than competitors like Valve’s gaming store, called Steam, which typically starts by taking a 30 percent cut. Epic Games’ store takes 12 percent.

“We want to make sure that we’re competitive in the market,” said Sarah Bond, a Microsoft vice president who leads the gaming ecosystem organization. “Our objective is to have a leading revenue share and really a leading platform.”

The share of revenue that developers get to keep has come under greater scrutiny across the tech industry. Google and Apple have faced antitrust questions for the 30 percent fees they charge developers whose programs appear in their app stores.

Last year, Epic sued Apple and Google separately, claiming they violated antitrust laws by forcing developers to use their payment systems. Epic had tried to bypass the fees by letting customers pay for items in its Fortnite video game directly through Epic. That caused Apple and Google to boot Fortnite from their app stores.

Apple and Google have since reduced fees for some developers. Epic’s lawsuit against Apple is set to head to trial on Monday in U.S. District Court in Oakland, Calif.

A Shell recharging station for electric vehicles in the Netherlands. Despite investments in renewable energy, Shell’s profit last quarter was largely the result of rising oil and gas prices.
Credit…Koen Van Weel/EPA, via Shutterstock

Strong profit increases from two of Europe’s largest energy companies, Royal Dutch Shell and Total, demonstrated that what really matters for the financial performance of these companies remains the price of oil and natural gas.

Their recent investments in clean energy, described by company officials as essential for the future, remain marginal.

Total said that adjusted net income rose by 69 percent compared with the period a year earlier, when the effects of the pandemic were beginning to kick in, to $3 billion, while Shell said that what it calls adjusted earnings rose by 13 percent to $3.2 billion.

The main factor in the improved performance by both companies was a roughly 20 percent rise in oil prices along with an increase in natural gas prices, leading to higher revenues. During a news conference to discuss the results, Jessica Uhl, Shell’s chief financial officer, said that a $10 jump in oil prices would translate into a $6.4 billion increase in cash for the company’s coffers on an annual basis.

Shell, which cut its dividend last year for the first time since World War II, confirmed that it would increase the payout for the quarter by 4 percent, to about 17 cents a share.

Both companies have tethered their futures to generating and distributing renewable sources of energy. Shell in February said its oil production had peaked in 2019, and it has been investing in various clean energy ventures, including a network of 60,000 charging stations for electric vehicles. And Total has, among other things, invested in options to build offshore wind farms off Britain.

In its earnings statement, Total took the lead among the oil majors in providing details on its investments in renewable energy like wind and solar. The company said these businesses brought in $148 million for the quarter, measured as earnings before interest, taxes, depreciation and amortization. This figure was about 2 percent of the overall total for the company of $7.3 billion, according to analysts at Bernstein, a research firm.

Although Airbus reported a quarterly profit after a full-year loss for 2020,  “the market remains uncertain,”  said Guillaume Faury, the company’s chief executive.
Credit…Chema Moya/EPA, via Shutterstock

Airbus announced Thursday that it had returned to a profit in the first quarter following a 1.1 billion euro loss last year because of the coronavirus pandemic, but its top executive warned that the economic toll would continue.

“The first quarter shows that the crisis is not yet over for our industry, and that the market remains uncertain,” Guillaume Faury, chief executive of the world’s largest airplane maker, said in a statement.

Airbus booked a net profit of 362 million euros ($440 million) between January and March, compared with a loss of 481 million euros a year earlier, as cost-cutting measures — which included more than 11,000 layoffs announced last year for its global operations — bolstered the bottom line. Revenue fell 2 percent to 10.5 billion euros.

Airbus delivered 125 commercial aircraft to airlines in the three-month period, up from 122 a year earlier. Over all, Airbus delivered 566 aircraft to airlines in 2020, 40 percent less than expected before the pandemic.

Airbus has previously warned that the industry might not recover from the disruption caused by the pandemic until as late as 2025, as new virus variants delay a resumption of worldwide air travel.

Given the uncertain outlook, Airbus won’t ramp up aircraft deliveries this year. The company said it expected to deliver 566 aircraft on back order from airline companies, the same number as last year.

It maintained its forecast for an underlying operating profit of two billion euros for the year.

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Stocks on Wall Street jumped on Thursday, rising with European stock indexes, amid indications that the economy is moving toward a recovery to prepandemic levels.

The Commerce Department reported Thursday that the U.S. economy expanded 1.6 percent in the first three months of 2021, compared with 1.1 percent in the final quarter last year, or 6.4 percent on an annualized basis.

A day earlier, the Federal Reserve said that the outlook was improving and that it would continue to provide substantial monetary support, easing investors’ concerns that it would soon start easing the stimulus efforts it launched a year ago when the Covid-19 crisis forced a near shutdown of many parts of the economy.

“While the level of new cases remains concerning,” Jerome H. Powell, the Federal Reserve chair, said, “continued vaccinations should allow for a return to more normal economic conditions later this year.” The central bank kept interest rates near zero and said it would continue buying bonds at a steady clip.

The S&P 500 rose 0.7 percent. Market sentiment continued to rise after President Biden detailed more of his spending plans — which total $4 trillion — to fund expanded access to education and reduce the cost of child care, among other things.

Oil prices rose. Futures of West Texas Intermediate, the U.S. benchmark, climbed more than 2 percent to above $5 a barrel.

The Stoxx Europe 600 rose 0.3 percent as a measure of economic confidence for the eurozone surged higher.

Amazon announced raises for half a million employees in its warehouses, delivery network and other fulfillment teams.
Credit…Chang W. Lee/The New York Times

Amazon will increase pay between 50 cents and $3 an hour for half a million workers in its warehouses, delivery network and other fulfillment teams, the company said on Wednesday.

The action follows scrutiny of Amazon from lawmakers and an unsuccessful unionization push that ended this month at its large warehouse in Alabama. In 2018, Amazon raised its minimum pay to $15 an hour. In recent months, it has publicly campaigned to raise the federal minimum to $15, too.

Amazon has been on a hiring spree during the pandemic. As more customers ordered items online, the company added 400,000 employees in the United States last year. Its total work force stands at almost 1.3 million people.

Amazon typically revaluates wages each fall, before the holiday shopping season. But this year, it moved those changes earlier, said Darcie Henry, an Amazon vice president of people experience and technology. The new wages will roll out from mid-May through early June. Ms. Henry said the company was hiring for “tens of thousands” of open positions.

Jeff Bezos, Amazon’s founder and chief executive, recently told shareholders in his annual letter that he recognized the company needed “a better vision for how we create value for employees — a vision for their success.” He said that Amazon had always striven to be “Earth’s Most Customer-Centric Company,” and that now he wanted it to be “Earth’s Best Employer and Earth’s Safest Place to Work” as well.

Amazon is scheduled to report quarterly earnings on Thursday.

Gary Gensler’s tenure leading the Securities and Exchange Commission is off to a rocky start: Alex Oh, who he named just days ago to run the regulator’s enforcement division, has resigned following a federal court ruling in a case involving one of her corporate clients, ExxonMobil.

In her resignation letter on Wednesday, Ms. Oh said the matter would be “an unwelcome distraction to the important work” of the enforcement division.

Ms. Oh’s resignation letter followed a ruling on Monday from Judge Royce C. Lamberth of the Federal District Court for the District of Columbia over the conduct of Exxon’s lawyers during a civil case involving claims of human rights abuses in the Aceh province of Indonesia.

According to Judge Lamberth’s ruling, Exxon’s lawyers claimed without providing evidence that the plaintiffs’ attorneys were “agitated, disrespectful and unhinged” during a deposition. He ordered Exxon’s lawyers to show why penalties were not warranted for those comments.

The ruling did not single out any lawyers by name. Ms. Oh was one of the lead lawyers for Exxon.

The judge’s order also granted the plaintiffs’ motion that Exxon pay “reasonable expenses” associated with litigating their request for sanctions and with an accompanying motion to compel additional testimony from Exxon related to the deposition.

Ms. Oh’s resignation letter did not mention the Exxon case by name, but a person briefed on the matter confirmed that the ruling from Judge Lamberth had prompted her to step down.

Ms. Oh, a former federal prosecutor in Manhattan who worked for the elite firm Paul, Weiss for nearly two decades, was picked by Mr. Gensler to oversee the S.E.C.’s 1,000-attorney enforcement division on April 22. The same day, she filed a notice with the court in the Exxon case saying she had withdrawn from the matter because she had resigned from the firm to join the federal government.

The civil litigation involving Exxon is nearly two decades old and involves allegations by the plaintiffs that Exxon’s security personnel “inflicted grievous injuries” on them. The lawsuit was brought under the federal Alien Tort Claims Act, which enables residents of other countries to sue in the United States for damages arising from violations of U.S. treaties or “the law of nations.”

Mr. Gensler said in a news release that Melissa Hodgman, who had been the enforcement division’s acting chief since January, will return to that position. Ms. Hodgman has been an enforcement attorney with the agency since 2008. He thanked Ms. Oh for her “willingness to serve the country.”

Ms. Oh could not immediately be reached for comment.

Brad Karp, chairman of Paul, Weiss, said the firm would not comment on the matter because it involved ongoing litigation. “Alex is a person of the utmost integrity and a consummate professional with a strong ethical code,” he added.

Ms. Oh is a highly respected lawyer, but her selection had been criticized by the Revolving Door Project, a good-government group, because she had been in private practice for so many years and had defended some of the largest U.S. companies.

Increased supply-chain and freight costs for cereal makers could translate into higher retail prices for customers.
Credit…Sara Hylton for The New York Times

Before the pandemic, when suppliers raised the cost of diapers, cereal and other everyday goods, retailers often absorbed the increase because stiff competition forced them to keep prices stable.

Now, with Americans’ shopping habits having shifted rapidly — with people spending more on treadmills and office furniture and less at restaurants and movie theaters — retailers are also adjusting, Gillian Friedman reports for The New York Times.

The Consumer Price Index, the measure of the average change in the prices paid by U.S. shoppers for consumer goods, increased 0.6 percent in March, the largest rise since August 2012, according to the Bureau of Labor Statistics. Procter & Gamble is raising prices on items like Pampers and Tampax in September. General Mills, which makes cereal brands including Cheerios, is facing increased supply-chain and freight costs that could translate into higher retail prices for customers.

At the beginning of the pandemic, companies were focused on fulfilling demand for toilet paper, cleaning supplies, canned food and masks, said Greg Portell, a partner at Kearney, a consulting firm. The government was watching for price-gouging, and customers were wary of being taken advantage of.

Now that the economy is beginning to stabilize, companies are starting to rebalance pricing so that it better fits their profit expectations and takes into account inflation. “This isn’t an opportunistic profit-taking by companies,” Mr. Portell said. “This is a reset of the market.”

Gary Gensler, the chair of the Securities Exchange Commission, has some expertise with cryptocurrencies.
Credit…Kayana Szymczak for The New York Times

For many cryptocurrency supporters and investors, regulatory approval of a Bitcoin exchange-traded fund in the United States represents the holy grail. It would allow the crypto-curious to get exposure to Bitcoin without having to buy the tokens themselves, signifying that digital assets are really, truly mainstream.

But it’s not meant to be — yet. On Wednesday, the Securities and Exchange Commission delayed a decision on a Bitcoin E.T.F. proposal from the investment manager VanEck, saying it needs more time but offering no other explanation.

Delay is not denial, and it may be a good sign, Todd Cipperman, the founder of the compliance services firm CCS, told the DealBook newsletter. When considering the concept of a crypto E.T.F. in 2018, the S.E.C. raised questions about investor protection issues and put a “wet blanket on the whole idea,” he said.

Now, crypto is much bigger, and Gary Gensler, who taught courses about blockchain technology at M.I.T., is chair of the S.E.C. His expertise doesn’t guarantee success for crypto E.T.F.s, but it will be easier for an expert in the field to approve them, Mr. Cipperman suggested.

The S.E.C. gave itself until mid-June, with the option to take more time, but it must decide before year’s end. The regulator has rejected every proposal to date, starting with the first Bitcoin E.T.F. pitch in 2013, presented by the Winklevoss twins, which was eventually dismissed in 2017 (and again in 2018). There are several E.T.F. proposals on the table now, including one from the traditional finance giant Fidelity.

Canada is moving faster, approving all kinds of crypto E.T.F.s, after allowing its first Bitcoin E.T.F. in February. Hester Peirce, an S.E.C. commissioner and vocal crypto champion, told DealBook earlier this month that she has been “mystified” by her agency’s response to some prior applications, which met the standards in her view. With more players now engaging in the process, approval could be looming — eventually.

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How the Stimulus Could Power a Rebound in Other Countries

Washington’s robust spending in response to the coronavirus crisis is helping to pull the United States out of its sharpest economic slump in decades, funneling trillions of dollars to Americans’ checking accounts and to businesses.

Now, the rest of the world is expected to benefit, too.

Global forecasters are predicting that the United States and its record-setting stimulus spending could help to haul a weakened Europe and struggling developing countries out of their own economic morass, especially when paired with a rapid vaccine rollout that has poised the U.S. economy for a faster recovery.

As Americans buy more, they should spur trade and investment and invigorate demand for German cars, Australian wine, Mexican auto parts and French fashions.

The anticipated economic rebound in the United States is expected to join China’s recovery, adding impetus to world output. China’s economy is forecast to expand rapidly this year, with the International Monetary Fund predicting 8.1 percent growth. That is good news for countries like Germany, which depends on Chinese demand for cars and machinery.

just begun to push infections higher in the United States — and a large policy response, including more than $5 trillion in debt-fueled pandemic relief spending passed into law over the past 12 months. Those trends, paired with the accelerating spread of effective vaccinations, seem likely to leave the American economy in a stronger position.

“When the U.S. economy is strong, that strength tends to support global activity as well,” Jerome H. Powell, the chair of the Federal Reserve, said at a recent news conference.

A year ago, it was not at all certain that the United States would gain the strength to help lift the global economy.

International Monetary Fund forecast in April 2020 that the U.S. economy might expand by 4.7 percent this year, roughly in line with forecasts for Europe’s growth, following an expected slump of 5.9 percent in 2020. But the actual contraction in the United States was smaller, and in January, the I.M.F. upgraded the outlook for U.S. growth to 5.1 percent this year, while the euro area’s expected growth was marked down to 4.2 percent.

I.M.F. has signaled that the estimates for the country’s growth will be marked up further when it releases fresh forecasts on April 6.

The recent relief package continues a trend: America has been willing to spend to combat the pandemic’s economic fallout from the start.

America’s initial pandemic response spending, amounting to a little less than $3 trillion, was 50 percent larger, as a share of G.D.P., than what the United Kingdom rolled out, and roughly three times as much as in France, Italy or Spain, based on an analysis by Christina D. Romer at the University of California, Berkeley.

Among a set of advanced economies, only New Zealand has borrowed and spent as big a share of its G.D.P. as the United States has, the analysis found.

In Europe, where workers in many countries were shielded from job losses and plunging income by government furlough programs, the slow pace of the European Union’s vaccination campaign will probably hurt the economy, said Ludovic Subran, the chief economist of German insurance giant Allianz.

On Wednesday, France announced its third national lockdown as infected patients fill its hospitals.

Mr. Subran also questioned whether the European Union can distribute stimulus financing fast enough. The money from a 750 billion euro, or $880 billion, relief program agreed to by European governments last July has been slow to reach the businesses and people who need it because of political squabbling, creaky public administration and a court challenge in Germany.

administered only about 1 vaccine dose per 1,000 people, if that, based on New York Times data. In the United States, the rate is more than 400 doses per 1,000 people.

Still, a booming American economy poses some hazard to other nations — and especially emerging markets — as economic fates diverge.

Market-based interest rates in the United States are already climbing, as investors, sensing faster growth and quicker inflation around the corner, decide to sell bonds. That could make financing more expensive around the globe: If investors can earn higher rates on U.S. bonds, they are less likely to invest in foreign debt that offers either lower rates or higher risk.

If the United States lures capital away from the rest of the world, “the rose-colored view that we are helping everyone is very much in doubt,” said Robin Brooks, chief economist at the Institute of International Finance.

trade tensions with Europe, which the Trump administration treated like an adversary. President Biden met online with European leaders last week.

The U.S. stimulus packages “will be part of the water that lifts all boats,” Selina Jackson, senior vice president for global government relations and public policy at consumer products company Procter & Gamble, said during a recent panel discussion organized by the American Chamber of Commerce to the European Union. “We are hoping for a calm slide out of this economic situation.”

Keith Bradsher contributed reporting.

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