Weekly jobless claims data shows 1.51 million people filed new unemployment claims for the week of June 13, a decline from the previous week but still staggeringly high as the
The latest figure from the Labor Department marked the 11th straight weekly decline in applications since they peaked at nearly 7 million in March, as the coronavirus shut down much of the economy and caused tens of millions of layoffs. The decline was much smaller, though, than in recent weeks, falling just 58,000.
The total number of people receiving unemployment aid also fell slightly, reflecting the return of many to their old jobs.
A second wave of layoffs amid weak demand and fractured supply chains is likely keeping new U.S. applications for unemployment benefits elevated, supporting views that the economy faces a long and difficult recovery from COVID-19.
Thousands line up outside a temporary unemployment office established by the Kentucky Labor Cabinet at the State Capitol Annex in Frankfort, Kentucky on Wednesday
The job market appears to have begun a slow recovery. In May, employers added 2.5 million jobs, an increase that suggested that the job market has bottomed out. The unemployment rate declined from 14.7 percent to a still-high 13.3 percent.
Even with the May hiring gain, nearly 21 million people are officially classified as unemployed. And including people the government said had been erroneously categorized as employed in May and those who lost jobs but didn’t look for new ones, 32.5 million people are out of work, economists estimate.
Thursday’s report also showed that an additional 760,000 people applied for jobless benefits last week under a new program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.
‘People will say claims are coming down, but for an economy that is reopening, that is a huge number,’ said Steven Blitz, chief U.S. economist at TS Lombard in New York.
‘The economy is losing workers and employment beyond the initial impact tied to businesses that shut down. There are a lot of industries that are getting hurt and that’s starting to cascade down, that is what those numbers are showing.’
Corinne Cook, who lives in Kissimmee, near Orlando, felt a huge relief to finally receive her unemployment benefits last week after a month and a half of battling Florida’s bureaucracy.
Cook, 28, had moved to the area in September for an 18-month contract position as a 3-D modeler for Walt Disney, a job involving sculpting character prototypes that were printed on 3-D printers. But she was laid off in mid-April after the parks closed down.
She is receiving the minimum state unemployment benefit from Florida, $125 a week, because the state has no record of her prior earnings in New Jersey, even though she said she has uploaded, mailed and faxed her documents from her job there.
If her previous earnings were properly credited, her state benefits would more than double. She is grateful, though, for the extra $600 in federal unemployment benefits, which have allowed her to pay off some bills.
‘It was very stressful,’ she said. ‘I definitely lost it a few times.’
She is applying for a new job and hopes to stay in the area. But there aren´t a lot of open positions in her field.
‘The future is very unknown at this point,’ Cook said.
The steady decline in jobless claims follows some other encouraging reports that suggest that the lifting of shutdown orders has sparked some pent-up demand from consumers, whose spending largely drives the economy.
Most economic gauges remain far below their pre-pandemic levels, though, and some analysts question whether the recent gains can be sustained, especially if the virus were to surge back.
Last month, retail and restaurant sales jumped nearly 18 percent, the government said Tuesday, retracing some of the record plunges of the previous two months. Even so, retail purchases remain a sizable 6 percent below their year-ago levels.
Furniture store sales nearly doubled, and clothing sales nearly tripled, though both remain far below their levels before the coronavirus struck. Clothing store sales are still down 60 percent compared with a year earlier.
With nearly record-low mortgage rates, applications for home loans reached an 11-year high last week. But even though the number of homes under construction rose in May, they remain substantially below last year’s pace.
The economy and the job market face a raft of uncertainties that could slow or even derail a recovery. Business re-openings have caused spikes of viral infections in nearly half of states, a trend that could lead consumers to pull back again on shopping and dining out and reverse any economic gains.
Restaurants, bars, gyms and movie theaters will likely rehire only a portion of their workforces. Many consumers won’t fully resume their previous habits of shopping, traveling and going out until a vaccine is available.
One key reason why consumer spending has rebounded is that government aid programs, from one-time $1,200 stimulus checks to $600-a-week in supplemental federal unemployment aid, have helped offset the loss of income for laid-off Americans. Yet nearly all the stimulus checks have been issued. And the supplemental federal jobless aid is set to expire July 31.
Federal Reserve Chair Jerome Powell told lawmakers this week that ‘significant uncertainty remains about the timing and strength of the recovery.’ The economy fell into recession in February.
Economists expect an acceleration in layoffs when the government’s Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion, giving businesses loans that can be partially forgiven if used for wages, runs out.
‘There are continued layoffs across industrial sectors with some risk to white collar jobs as we move past this tranche of government aid,’ said Joe Brusuelas, chief economist at RSM in New York. ‘There are concerns of bankruptcies, which will force firms to reduce head count.’