The number of American workers filing initial unemployment claims has come in at over 1 million for the 20th straight week, suggesting that despite green shoots in the economy, the dynamics of recovery continue to be clouded by uncertainty.
The Labor Department said in a release (pdf) Thursday that nearly 1.2 million laid-off Americans applied for state unemployment benefits last week, yet another sign that the pandemic keeps forcing companies to slash jobs.
The total number of people claiming jobless benefits in all federal and state programs for the week ending July 18 rose by 1.3 million compared to the previous week, bringing the total to over 32 million.
The jobless claims figures come just as a critical $600 weekly federal jobless payment lapsed while lawmakers remain in deadlock over its extension. Top congressional Democrats and White House officials appeared to harden their stances on new relief legislation on Wednesday, as negotiations headed toward an end-of-week deadline with little sign of an agreement.
President Donald Trump, in an Aug. 4 interview with Gray Television, said that he is prepared to get personally involved in negotiating an extension of the $600-per-week enhanced unemployment insurance benefit to make it happen.
“Im going to have to, because we have to take care of our people,” Trump said, adding that Americans should continue to receive the enhanced pandemic-related jobless benefit because “its not their fault. Its Chinas fault that this whole thing happened.”
“We were setting records. We were doing unbelievable business. It was an incredible thing,” Trump added. Following pandemic-driven lockdowns and a plunge in consumer spending, Americas economy contracted by a staggering 32.9 percent annualized rate in the second quarter, more than triple the previous all-time gross domestic product drop of 10 percent in the second quarter of 1958. The unemployment rate shot up from a 50-year low of 3.5 percent in February to 14.7 percent in April.
Bright spots in Thursdays jobless numbers release include the fact that the number of newly filed jobless claims dropped by 249,000 in the week ending Aug. 1 from a week earlier, after rising for two straight weeks. Also, the number of continuing jobless claims dropped by 844,000 to 16.1 million for the week ending July 25.
It follows mixed reports from the Institute of Supply Management (ISM) this week, showing that while overall business activity in both manufacturing and services is growing, employment continues to shrink.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, called the drop in the weekly jobless claims “a move in the right direction,” but warned in a research note that risks to recovery remain.
“Repeated shutdowns for virus containment remain a threat to the labor market, which is already weak. The possibility of mounting layoffs that could become permanent is high. Without effective virus containment, the recovery remains at risk from ongoing job losses that could further restrain incomes and spending,” Farooqi wrote.