1.2 mil­lion seek job­less aid after $600 fed­eral check ends

Chicago Sun-Times - - BUSINESS -

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.

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