Unemployment: 1.5 Million New State Claims in Weekly Tally

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As American businesses reopen in fits and starts — and anxiety over new coronavirus hot spots increases — state unemployment offices still have their hands full.

Nearly 1.5 million workers filed new claims for state unemployment insurance last week, the Labor Department reported Thursday, the 14th week in a row that the figure has topped one million.

An additional 728,000 filed for benefits from Pandemic Unemployment Assistance, a federally funded emergency program aimed at covering the self-employed, independent contractors and other workers who don’t qualify for traditional unemployment insurance.

To be sure, the weekly pace of new state filings is a fraction of the more than 6.5 million recorded in early April. As businesses have reopened, some employees have been called back. The total number of people collecting state unemployment insurance for the week ending June 13 was 19.5 million, seasonally adjusted, a decrease of 767,000 from the previous week and down from nearly 25 million in early May.

Despite the drop in continuing claims, “19.5 million is still a very high number to have on unemployment benefits,” said Torsten Slok, chief economist at Deutsche Bank Securities. In February, before the pandemic arrived in full force, that total stood at two million.

“It’s difficult to argue that this is a real improvement,” he said. “We still have a long, long road ahead of us.” What’s more, the 19.5 million figure doesn’t include over 11 million individuals receiving federal Pandemic Unemployment Assistance as of June 6. That means roughly 30 million Americans were receiving some sort of unemployment benefit.

In a separate report Thursday, the Commerce Department reported that durable goods orders rose 15.8 percent in May, well above the 10.5 percent increase that economists had been expecting. Stronger sales of items like cars and washers and dryers are a bullish indicator and hint at the demand for many goods that has built up since the economy effectively shut down in March.

As the latest data suggest, the American economy has been sending conflicting signals. On the one hand, New York and some other places that were hard hit early in the outbreak are starting to get back to business.

But a spike in cases in states that reopened earlier has raised fears of new setbacks. On Thursday, Gov. Greg Abbott of Texas said the state “will pause any further phases to open” because of the recent increase in positive tests and hospitalizations. And California and Florida have posted record numbers of new cases in recent days.

After reopening, Apple has shut its stores in four states — Florida, South Carolina, North Carolina and Arizona — and on Wednesday closed seven stores in Houston.

“The renewed outbreak will hinder the recovery,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago. “I can’t help but think that the willingness of consumers to be in crowded places has diminished. It’s going to be a long haul to get back to where we were before the pandemic.”

The persistently high level of new jobless claims has raised questions for economists like Mr. Slok, who terms the million-plus weekly totals a “real mystery.”

One possibility is that many states are still working through a huge backlog of claims, as old computer systems struggle to adapt to an inflow that dwarfs that of previous downturns.

In addition, some businesses that were spared early in the crisis may be starting to trim their work forces. Changes in the guidelines for the federal Paycheck Protection Program may also be playing a role; as requirements for maintaining payrolls expire, more workers may be getting pink slips.

A survey released this week from the National Federation of Independent Business found that 14 percent of employers planned to cut workers after making use of Paycheck Protection Program loans. More than 40 percent of business owners said they had seen no increase in sales as restrictions eased in many states.

The latest monthly jobs data from the federal government only added to the mystery. In May, employment rose by 2.5 million, the Labor Department reported, with the official unemployment rate dropping to 13.3 percent. The report for June will be released in a week.

“There’s a lot of turmoil in the labor market, a lot of churn,” said Joel Prakken, chief U.S. economist at the consulting and research firm IHS Markit. While economists have debated whether the recovery will take the form of a V or a Nike swoosh, Mr. Prakken said the recent uptick in coronavirus cases could create a W-shaped rebound. “The upturn in cases is worrisome,” he added.

So far, the recovery has been uneven, according to data analyzed by IHS. After being down 100 percent in April, the number of seated diners at restaurants is now off by 40 percent, a considerable improvement. Demand for gasoline is halfway back to where it was before the virus. But spending on air travel and moviegoing remains depressed.

The shaky economic outlook has both experts and workers worried about the looming expiration of the Federal Pandemic Unemployment Compensation program, which provides a supplement of $600 a week to those collecting state jobless benefits.

“It’s made all the difference, because basic unemployment isn’t enough,” said Richard Brenin, who was laid off in March from his position doing postproduction work for television shows and movies in Los Angeles.

Without the $600 federal payment, Mr. Brenin would collect $450 a week. “It barely covers the rent, with nothing left over for the car payment, basic expenses or food,” he said, and he and his husband “don’t have much saved up.”

  • Updated June 24, 2020

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