1.4M filed for unemployment

Economists are wary as $600 benefit comes to an end

Charisse Jones

The number of Americans applying for unemployment benefits rose again last week, as the economy stalled amid surges of the coronavirus, and extra help from the federal government came to an end.

A total of 1.4 million people filed unemployment claims for the first time last week as businesses given a green light to welcome back customers shut their doors again to slow the spread of COVID-19. The latest tally means that in less than five months, a stunning 54.1 million have sought unemployment aid for the first time. And it was another dismal marker on a day when the Commerce Department reported the U.S. economy saw its worst performance ever in the second quarter, with the value of all goods and services produced contracting at a seasonally adjusted annual rate of 32.9% in the AprilJune period.

The need for unemployment benefits continues to grow even as an extra $600 a week from the federal government ended this month, a cushion many economists said was critical to bolster state payments that typically average $370.

It’s the second week in a row that initial unemployment claims have gone up – rising by 12,000 – a worrying trend in a 15-week stretch that saw applications gradually decline.

“The economy is at serious risk of sliding back into recession ... unless Congress and the Trump administration come up with another fiscal rescue package before Congress goes on its

“The economy is at serious risk of sliding back into recession ... unless Congress and the Trump administration come up with another fiscal rescue package ...”

Ryan Sweet, Moody’s Analytics

August recess,” said Ryan Sweet, senior director of economic research for Moody’s Analytics, in an investors note.

Republicans have proposed a $1 trillion package that would include another round of $1,200 direct payments to millions of Americans, as well as additional funds for small businesses. But the plan would reduce the $600 unemployment supplement. House Democrats approved a $3 trillion bill in May that would extend the $600 benefit and deliver a second $1,200 relief check.

“Given the deteriorating economy, the final agreement needs to end up closer to the House proposal than the Senate’s,” Sweet wrote. “The pandemic and resulting economic fallout could be less serious than feared,” Sweet wrote, “but given the extraordinary uncertainty over how this will all play out, lawmakers should err on the side of a rescue package that is bigger than may ultimately be needed than one too small.”