Jobless claims reverse, rise again
1.4M filed last week; change is the first since late March
WASHINGTON — The nation got another dose of bad economic news Thursday as the number of laid-off workers seeking jobless benefits rose last week for the first time since late March, intensifying concerns that the resurgent coronavirus is stalling or even reversing the economic recovery.
And an extra $600 in weekly unemployment benefits, provided by the federal government on top of assistance states provide, is set to expire at the end of the week. It 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 a onetime $1,200 payment have largely run their course.
With the count of U.S. infections passing 4 million and the aid ending, nearly 30 million unemployed people could struggle to pay rent, utilities or other bills. And economists worry that overall consumer spending will drop, adding another economic blow.
“I’m going to be broke,” said Melissa Bennett, who was laid off from her job at a vacation timeshare in Myrtle Beach, S.C. “I’ll be broke-broke. I want to go to work, I want health insurance, I want a 401K. I want a life; I have no life right now.”
Without the extra unemployment benefits, Bennett will receive just $200 a week, and she’ll have to decide whether to pay her mortgage or her utilities first.
More than 1.4 million people applied for jobless benefits last week, the Labor Department said Thursday, up from 1.3 million the previous week. That is the first in
crease since March and the 18th straight week that it has topped 1 million. Before the pandemic, applications had never exceeded 700,000. An additional 975,000 people applied for aid under a separate program that has made self-employed and gig workers eligible for the first time.
Last week, an additional 86,800 Texans applied for firsttime unemployment benefits, according to the Labor Department. That’s about six times higher than pre-pandemic rates. Still, the rate is down from the last two weeks, when claims were trending higher, above 100,000 per week.
About 1.3 million Texans are currently receiving benefits, according to the Labor Department data.
The weakening of the labor
market has raised fears that the economy will shed jobs again in July, after sharp hiring gains in May and June.
“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 company.
Analysts say the economy can’t improve until authorities can control the spread of the virus, a need that is complicating the reopening of businesses and schools.
Adm. Brett Giroir, assistant secretary of health and a member of the Trump administration’s coronavirus task force, even suggested that another shutdown might be necessary. He noted that nearly universal mask-wearing, restrictions on restaurant occupancy and shutting down bars were nearly as effective in controlling
the virus as another shutdown of all nonessential businesses.
“Now, if you don’t do that, and people don’t achieve those goals, particularly mask-wearing, there may be no alternative,” Giroir said on MSNBC.
Congress is negotiating another aid package that could extend the extra unemployment support, though likely at less than $600. With the extra $600, roughly two-thirds of the unemployed are receiving more in aid than they earned at their former jobs, research has shown.
On Thursday, Senate Republicans unveiled a $1 trillion package that would replace the $600 with an amount that would bring a laid-off worker’s jobless benefits to 70 percent of their previous income. Both parties have agreed on another $1,200 stimulus check.
In contrast to the U.S., the outlook has brightened for some other major economies. Europe is
forecast to rebound next year after it managed to shrink its coronavirus caseload. Unemployment in the 19 countries that use the euro has remained contained, reflecting aggressive government efforts to keep workers on payrolls.
And China has become the first major economy to grow since the start of the pandemic. Economists say China will likely recover relatively fast because of the Communist Party’s move to impose early and intensive anti-disease measures.
Last week, applications for unemployment benefits declined in many states that have been hard hit by the virus, including Texas, Florida, Georgia and Arizona. But claims rose in other states that are also seeing increases, including Louisiana, California and Tennessee.
The U.S. government also said Thursday that the 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.
Unemployment aid accounted for 6 percent 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. 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.
The end of the added benefit coincides with the expiration of a federal moratorium on evictions Saturday. That moratorium bars evictions of renters who live in federally subsidized housing, and without it, about 22 million people are at risk of losing their homes.