Jobless claims
July, down from 11.1% in June. But the economy continues to stumble through fits and starts, with hard-hit industries including hospitality and retail companies bolstering their staff in some parts of the country, while businesses in the Sun Belt cut jobs as the coronavirus spikes there.
It’s far too early to declare “mission accomplished,” Bankrate.com senior economic analyst Mark Hamrick said in an interview. “What we’re really doing is recovering some of the jobs lost.”
Hospitals appear to be stabilizing after shedding jobs earlier in the pandemic due to a postponement of elective procedures, he noted. Dentist offices have also reopened after temporary closures, fueling some job gains.
But travel businesses like airlines and hotel companies are still sluggish, with business travel in particular slow to bounce back, he said.
Early signs that the outbreak is ebbing in key hot spots might also have partially fueled the improved numbers, Hamrick said.
And the amount of shifts Americans are working is increasing just 0.5% a week on average in August. says Dave Gilbertson, vice president of strategy and operations for Kronos, a workforce management software firm.
“This indicates that while businesses may be recalling some furloughed employees, they continue to struggle to generate enough activity to return to
full staffing capacity,” Gilbertson said in an emailed statement, “hindered by a combination of summer seasonality, statewide reopening pauses or reversals, and, in some sectors, below-average consumer demand.”
Congress stalled over benefit
Meanwhile, the extra financial aid and protections extended to help outof-work Americans weather the economic downturn remains in limbo, with Congress unable to sign off on a new aid package. And the encouraging jobless claims report could make more federal aid appear less necessary.
“If it was going to take a sense of urgency to get Democrats and Republicans to come to an agreement, the stock market trading right near record highs and jobless claims back below a million aren’t providing any ammunition,” Bespoke Investment Group analyst Paul Hickey wrote in an analysis Thursday.
Democrats want to reinstate the extra $600 through the end of the year while Republicans want to reduce it to $200 a week.
President Donald Trump issued a memorandum that would provide unemployed Americans with an additional $400 per week. But that will likely be pared back to $300 after states balked at the requirement that they kick in a quarter of the funding, a contribution they say they can’t afford.
White House economic adviser Larry Kudlow said Tuesday that the states won’t have to pay the additional $100 if they already provide at least that amount in jobless benefits, which most states do.
Could spending by shoppers slip?
Many businesses have gone through the forgivable federal loans they received if they held onto or rehired their workers, leading to new rounds of layoffs.
Because Congress has not passed another financial assistance package “we may see a reversal in the gains in August,” Sophia Koropeckyj, an economist at Moody’s Analytics, said in an investors note.
“We are still confident that Congress and the White House will rally to provide about $1.5 trillion in support,” she said. “Yet, until a vaccine is widely available we do not expect the economy and labor market can climb completely out of the hole... Indeed we expect the economy to barely eke out any gains until 2021.”