1.2 million seek jobless aid after $600 federal check ends
WASHINGTON — Nearly 1.2 million laid-off Americans applied for state unemployment benefits last week, evidence that the coronavirus keeps forcing companies to slash jobs just as a critical $600 weekly federal jobless payment has expired.
The government’s report Thursday did offer a smidgen of hopeful news: The number of jobless claims declined by 249,000 from the previous week, after rising for two straight weeks, and it was the lowest total since mid-March.
The stock market was cheered by the news with the S&P 500, Dow and Nasdaq all posting gains Thursday.
Still, claims remain at alarmingly high levels: It is the 20th straight week that at least 1 million people have sought jobless aid. Before the pandemic hit hard in March, the number of Americans seeking unemployment checks had never surpassed 700,000 in a week, not even during the Great Recession of 2007-2009.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, called the drop in weekly claims “a move in the right direction.” But in a research note, she added:
“Repeated shutdowns for virus containment remain a threat to the labor market, which is already weak. The possibility of mounting layoffs that could become permanent is high. Without effective virus containment, the recovery remains at risk from ongoing job losses that could further restrain incomes and spending.”
On Friday, the government is expected to report a sizable job gain for July — 1.6 million. Yet so deeply did employers slash payrolls after the pandemic paralyzed the economy in March that even July’s expected gain would mean that barely 40% of the jobs lost to the coronavirus have been recovered.
All told, 16.1 million people are collecting traditional unemployment benefits from their state. For months, the unemployed had also been receiving the $600 a week in federal jobless aid on top of their state benefit. But the federal payment expired last week. Congress is engaged in prolonged negotiations over renewing the federal benefit.