The number of Americans applying for unemployment benefits increased for the first time in almost four months to 1.4 million last week — a troubling s
The number of Americans applying for unemployment benefits increased for the first time in almost four months to 1.4 million last week — a troubling signal that coronavirus recovery is stalling.
Workers have now filed more than 52 million initial jobless claims since layoffs spiked in mid-March, suggesting about a third of the American labor force has been sidelined at some point during the pandemic, according to the US Department of Labor figures released Thursday.
“It’s an early sign perhaps that the labor market, the recovery, is less robust than we thought,” Chris Rupkey, chief financial economist at MUFG Union Bank, told The Post. “… The improvement we had seen certainly is going the wrong way.”
Last week’s uptick — up from 1.3 million a week earlier and the first since late March — came as spikes in the virus has forced some states to rollback their efforts to reopening their economies. Yet millions of jobless Americans suffering the worst labor crisis since the Great Depression stand to lose their $600 weekly boost to unemployment benefits, failing an extension by Congress.
The data marks the 18th straight week with more than 1 million new jobless claims, a level unthinkable before the pandemic. The average for the past four weeks is more than 1.3 million — roughly double the Great Recession’s peak of 665,000.
“The head-in-the-sand view that this will pass is being overwhelmed by the reality of the storm that churns the sand,” Diane Swonk, chief economist at Grant Thornton and a Federal Reserve adviser, told The Post. “It’s feeling like quicksand and we can’t allow it to be that way.”
But continuing jobless claims, which measure ongoing unemployment on a one-week lag, fell to about 16.1 million in the week ending July 11, suggesting some people are still being called back to work.
While there’s no doubt the job market is in dire shape, experts say seasonal adjustments to the data could be distorting the picture they paint. For instance, the raw number of initial claims without those adjustments actually fell by 9.4 percent to 1.37 million last week after climbing the prior week, the feds said.
“In early July, the seasonal adjustment overstated the rate of recovery, but that effect is reversing now as the seasonal adjustment understates the rate of recovery,” said Glassdoor senior economist Daniel Zhao.
The extra $600 unemployment payments under the CARES Act, which have been a crucial lifeline for those out of work, is scheduled to end in two days.
Lawmakers in Congress are still hashing out whether to extend those extra payments or reduce them. Republicans reportedly favor slashing them to $200 a week, an amount that would be tweaked based on state jobless benefits rates.
But even cutting payments to $400 a week “would have perceptible impact on the economy,” according to Bloomberg economists Eliza Winger and Andrew Husby. It would drive down total payments by about $22 billion a month, which is equivalent to the average monthly wage income for 5.1 million workers, they said.
“It played a key role, and when you remove it you’re damaging the economy,” Swonk said. “It doesn’t make sense on any level.”
Fonte : nypost.com
