US unemployment falls to 11%, but new shutdowns are underway
WASHINGTON » U.S. unemployment fell to 11.1% in June as the economy added a solid 4.8 million jobs, the government reported Thursday. But the job-market recovery may already be faltering because of a new round of closings and layoffs triggered by a resurgence of the coronavirus.
While the jobless rate was down from 13.3% in May, it is still at a Depression-era level. And the data was gathered during the second week of June, just before a number of states began to reverse or suspend the reopenings of their economies to try to beat back the virus.
“This is a bit of a dated snapshot at this point,” said Jesse Edgerton, an economist at J.P. Morgan Chase.
The news came as the number of confirmed infections per day in the U.S. soared to an all-time high of 50,700, more than doubling over the past month, according to the count kept by Johns Hopkins University.
The spike, centered primarily in the South and West, has led states such as California, Texas, Arizona and Florida to re-close or otherwise clamp down again on bars, restaurants, movie theaters, beaches and swimming pools, throwing some workers out of a job for a second time.
The shutdowns over the past two weeks will be reflected in the July unemployment report, to be released in early August.
While the job market improved in June for a second straight month, the Labor Department report showed that the U.S. has recouped only about one-third of the colossal 22 million jobs lost during the lockdowns this spring.
Layoffs are still running high: The number of Americans who applied for unemployment benefits fell only slightly last week to 1.4 million, according to the government. Though the weekly figure has declined steadily since peaking in March, it is still extraordinarily large by historic standards.
And the total number of people drawing jobless benefits remains at a sizable 19 million.
U.S. job growth in June was driven mainly by companies recalling workers who had been laid off during the widespread business shutdowns across the country.
In an ominous trend contained in the Labor Department report, the number of Americans who said they had lost their jobs permanently rose by 600,000 last month to nearly 2.9 million.
Many businesses, particularly small ones, are shutting down for good even though the lockdowns have largely been lifted.
Erik Hurst, an economics professor at the University of Chicago, said many restaurants, bars and gyms can’t survive by operating at half-capacity, and customers are going to be cautious until there is a vaccine.
The job gains of the past two months have partly resulted from unprecedented levels of government spending, including $1,200 relief checks, more than $500 billion in grants to small businesses, and an extra $600 a week in unemployment benefits.
Those payments enabled millions of Americans to cover the rent and other bills. Yet those programs are expiring or tailing off. The additional $600 in unemployment ends July 31.
“We could see a huge cliff,” said Julia Pollak, labor economist at ZipRecruiter. “Those expanded benefits will expire before new hiring has really picked up.”