Weekly jobless claims drop below 1 million

The number of Americans filing for state unemployment benefits fell below 1 million last week for the first time since March. But layoffs remain exceptionally high by historical standards, even as the pace of rehiring has slowed.

The Labor Department reported Thursday that 963,000 people last week filed first-time claims for benefits under regular state unemployment programs. Another 489,000 applied under the federal Pandemic Unemployment Assistance program, which covers independent contractors, self-employed workers and others who don’t qualify for regular state unemployment insurance.

All told, more than 28 million people were receiving some form of unemployment benefits as of the week of July 25, down more than 3 million from the previous week.

The number for state claims is seasonally adjusted; the figure for the federal program is not.

“We’re finally below 1 million, so that’s something to celebrate,” said Beth Ann Bovino, the chief economist at S&P Global Ratings Services. “But it stops there. The worry I have is that the times of quick recalls are in the past. I suspect that these jobs being lost are permanent, and that’s a real problem for the

economy and for these households.”

Unemployment filings have fallen sharply since late March, when nearly 6.9 million Americans applied for benefits in a single week. But filings still dwarf those in any previous recession: Before the coronavirus pandemic, the worst week on record was in 1982, when 695,000 people submitted claims.

“Even though we’re exiting the worst of the current crisis, we’re still above the worst of the Great Recession,” said Daniel Zhao, senior economist for the career site Glassdoor.

Still, he said, it is encouraging to see unemployment filings dropping, especially after progress appeared to stall earlier this summer.

Even as layoffs have slowed, the broader economic recovery has lost momentum. Employers brought back 1.8 million jobs in July, the Labor Department reported last week, well below the 4.8 million in June. More timely data from private-sector sources suggests that the slowdown has continued in August, and economists warn that it could worsen now that key federal programs to help households and businesses weather the pandemic have expired.

The virus is blamed for more than 160,000 deaths and more than 5 million confirmed infections in the U.S. — easily the highest totals in the world.

The virus, the shutdowns meant to fight it and the reluctance or inability of many people to shop, travel or eat out continue to undermine the economy and force companies to cut staff positions. Over the past few months, 23 states have paused or reversed their business reopenings because of a resurgence of the virus.

“Another larger-than-expected decline in jobless claims suggests that the jobs recovery is regaining some momentum, but … much labor market progress remains to be done,” said Lydia Boussour, senior economist at Oxford Economics.

Hiring is believed to have slowed since the spring, when states reopened and millions of workers at bars, restaurants and stores were rehired. The job gain in August will probably fall short of the 1.8 million added in July, analysts say.

For months, on top of their state benefit, unemployed Americans collected the $600 a week in federal jobless aid. But that expired at the end of July, and negotiations in Congress to extend it, probably at a lower level, have collapsed in rancor.

President Donald Trump last weekend authorized the payment of an extra $400 a week in jobless benefits to unemployed Americans, smaller than the just-expired benefit — and limited by funds that could run out within two months.

Rather than a straightforward $400 benefit, though, the payment is actually just $300 in additional federal funds, and states can choose whether or not to add the $100 from their own coffers. Trump also announced a four-month deferral of payroll taxes, though economists questioned the effectiveness of such a move.

Some economists say they believe the end of the $600 has contributed to the drop in unemployment claims of late. Some of the unemployed may feel less incentive to apply.

At the same time, the bigger-than-expected drop in claims may support the argument by some businesses and Republicans that the $600 benefit was keeping people from returning to work.

A crush of benefit applications earlier in the outbreak resulted in huge backlogs that left millions of the unemployed waiting. Washington state went so far as to call in the National Guard to help process applications.

With confirmed virus cases still high, it’s not clear when business owners will be able to reopen or will have enough customers to rehire.

Grace Della is one of them. She opened her food tour business in Miami a decade ago with $300 from her mother. On weekends, she led the tours herself and eventually built up a business with 13 guides, averaging 10 tours a day through culinary hot spots in South Beach and Little Havana.

With scant customer demand, it has been more than four months since Miami Culinary Tours has taken out guests. Della, 46, said she hopes to reopen later this month but isn’t sure she can, given the state’s high level of confirmed infections.

Della said she tries to stay positive but confesses to moments of crippling fear. At one point, hyperventilating with anxiety, she contacted firefighters.

“There’s no money coming in,” Della said. “We’re all scared.”