US jobless claims rise for the first time since March

1.4M seek aid amid pandemic’s surge, economic worries

WASHINGTON — The viral pandemic’s resurgence caused the number of Americans seeking unemployment benefits to rise last week for the first time in nearly four months, evidence of the deepening economic pain the outbreak is causing.

The increase in weekly jobless claims to 1.4 million served to underscore the outsize role the unemployment insurance system is playing among the nation’s safety net programs — just when a $600 weekly federal aid payment for the jobless is set to expire at the end of this week.

Last week’s pace of unemployment applications — the 18th straight time it’s topped 1 million — was up from 1.3 million the previous week. Before the pandemic, applications had never exceeded 700,000. An additional 975,000 applied last week for jobless aid under a separate program that has made self-employed and gig workers eligible for the first time.

The weakening of the labor market has raised fears that the economy will shed jobs again in July, after two sharp hiring gains in May and June, and derail prospects for a recovery from the recession.

“The labor market remains in a precarious place as COVID-19 cases surge in some parts of the country and fresh lockdown measures are adopted in response,” said Nancy Vanden Houten, lead economist at Oxford Economics, a consulting firm.

The U.S. government also said Thursday that the total number of people receiving jobless benefits fell 1.1 million to 16.2 million. That was a hopeful sign that even as layoffs remain persistently high, some companies are recalling workers. Yet that figure is still roughly 10 times what it was before the pandemic.

Last week, applications for unemployment benefits declined in many states that have been hard hit by the virus, including Arizona, Florida, Georgia and Texas. Jobless claims rose in other states that are also seeing increases, however, including California, Louisiana and Tennessee.

The resurgence of confirmed virus cases has forced some businesses to close a second time or to impose tighter restrictions on customers in response to state mandates. The resulting pullback in business activity has hindered job growth and likely forced additional layoffs.

The federal government’s $600 weekly benefit for laid-off workers — which is in addition to whatever jobless aid a state provides — is the last major source of economic help from the $2 trillion relief package that Congress approved in March. A small-business lending program and one-time $1,200 payment have largely run their course.

Unemployment aid accounted for 6% of all U.S. income in May, a greater share than even Social Security. Economists say it’s one reason why retail spending rebounded as quickly as it did in May and June, helping fuel a modest economic rebound.

If the full $600 were extended, it would boost consumer spending enough to generate roughly 1 million jobs by the end of this year, Oxford Economics estimates.