1 million apply for unemployment claims
Out-of-work Americans continued to seek assistance last week as the economy remained in limbo amid spikes in coronavirus cases.
About 1 million filed initial claims for unemployment benefits, the Labor Department said Thursday, matching economists’ forecasts.
That latest surge means just over 58 million have sought aid for the first time in just 23 weeks.
The claims, a rough gauge of layoffs, speak to the economic straits of millions of Americans who are struggling to buy groceries, pay bills and stay in their homes.
“Six months into the pandemic, the leading issue is not new layoffs but rather the exceedingly slow pace by which workers are being rehired,” Andrew Stettner, senior fellow at The Century Foundation, said in a statement. “With September rent due soon and food insecurity already at elevated levels, the worst is yet to come if Congress and the President can’t turn their attention to pandemic relief.”
The first-time jobless claims slipped from the 1.1 million who applied the week before. But the number seeking unemployment assistance
has been volatile, slightly dropping, then rising, yet remaining historically high – far above the previous record of 695,000 weekly claims set during a recession in 1982.
The seesawing numbers reflect the slowdowns and upticks throughout the U.S. economy as businesses gradually reopen in some parts while others roll back reopenings and the rehiring of workers as COVID-19 cases spike.
The overall number of Americans diagnosed with the coronavirus has flattened after peaking in late April, but it continues to surge in parts of the country, recently rising fastest in several Southern states as well as North and South Dakota.
Now, what the Trump administration portrayed as a brief economic detour may be hardening into a downturn akin to the Great Recession of 2007-09, with as much as half of temporary layoffs and furloughs becoming permanent and the jobs landscape taking years to recover.
According to the Mortgage Bankers Association’s most recent survey, an estimated 3.6 million homeowners are in forbearance, meaning their lenders have temporarily halted or reduced mortgage payments for borrowers struggling to pay.
The number of home loans that have received that short-term relief shrank slightly to 7.2% as of Aug. 16 from 7.21% the week before, according to the MBA’s most recent survey.
“The share of loans in forbearance declined for the tenth week in a row, but the rate of improvement has slowed markedly,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. “The extremely high rate of initial claims for unemployment insurance and high level of unemployment remain a concern, and are indications
of the challenges many households are facing.”
Additionally, he said, the pace of those coming out of forbearance has slowed two weeks in a row.
Renters are in even greater trouble. Up to 15 million could face eviction, Oxford Economics said in a note, and protections that President Donald Trump has said he will offer through executive action are not spelled out.
“The eviction protections that Trump’s executive actions provide are vague, and even if the moratorium that expired on July 24 is extended, renters need direct financial assistance,” Oxford said.
As more Americans seek jobless aid, the size of the weekly benefits they can receive has shrunk significantly. An extra $600 from the federal government ended in July, and Congress has not reached an agreement on a new relief package.
Terri Hopson, who applied for unemployment benefits in early August after
losing her job as an office manager, says an extra $600 a week could be the difference between being able to pay all of her bills, or just a few.
“I wouldn’t have to worry about piecing out my groceries,’’ says Hopson, who lives in Chesterfield County, Virginia, outside Richmond. “I wouldn’t have to worry about paying my rent ... or letting my internet go, though I need that to apply for jobs.’’
Lawmakers in Washington need to do more, she says, and in a hurry.
“They’re all on recess,’’ she said. “People don’t have a month to wait. There are people who can’t wait 24 hours before they’re out on the street.”
Democrats want to offer that same extra $600 a week into next year. Meanwhile, Trump issued a memorandum authorizing $300 a week in federal assistance for those out of work because of the pandemic. But unemployed workers who receive less than $100 in state aid won’t qualify for the extra federal benefit.
That amounts to at least 1 million people, or roughly 6% of people receiving basic state unemployment, according to Eliza Forsythe, a labor economist and assistant professor at the University of Illinois at Urbana-Champaign.
Those who do qualify for the extra $300 still face potential roadblocks. States have to reconfigure their systems to pass out the money which can lead to long delays, experts say. More than half of states have been approved for the extra $300 in unemployment insurance, but Louisiana, Arizona and Texas are the only states that have begun handing out money, according to the Century Foundation.
And the additional money is likely short-lived. States applying for the federal grants will get an “initial obligation of three weeks of needed funding,” according to a recent memo from the Federal Emergency Management Agency, which will run the relief program through its Disaster Relief Fund. It will make other disbursements to states on a weekly basis.
“By our estimates, the additional $300/week implemented by President Trump will, at the earliest, hit unemployment checks in the final week of August and likely only last about four weeks,” Sam Bullard, managing director and senior economist for Wells Fargo Corporate and Investment Banking, said in an investors note. “Furthermore, the stand-still between Congress and the White House over additional stimulus points to a looming income cliff for consumers.”
Oxford Economics says the lost $600 benefit will cut jobless insurance benefits by at least $45 billion this month.
“The steep decline in federal support for unemployed workers and heightened uncertainty will depress consumer confidence and spending,” Oxford said. “The failure of lawmakers to extend the federal top-up of $600 per week to unemployed workers is dealing a significant blow to household income.”