More than 1.43 million people applied for unemployment benefits for the first time last week, according to weekly data released Thursday by the Labor Department. It is the second week in a row that the number has increased, and the 19th week in a row that the US has seen more than a million claims. By context, the previous peak was in 1982, when the weekly figure reached 695,000.
The extent of the economic damage caused by the coronavirus pandemic was further revealed on Thursday, with gross domestic product for the second quarter sinking to a record 32.9 percent annualized, according to data from the Office of Economic Analysis.
That number is in stark contrast to the solid growth seen before the government was forced to slow down the economy to stop the spread of the virus. Average GDP has been around 2 percent, on an annualized basis, but the massive shutdown of businesses, shops, and restaurants has reduced consumer spending, driving nearly 70 percent of the U.S. economy. United.
Although economic activity picked up in May, an increase in coronavirus cases in Sunbelt states has sparked a new round of closings, leaving many more Americans without jobs.
Federal Reserve Chairman Jerome Powell has repeatedly warned of a slow economic recovery if millions of workers cannot return to their previous jobs and need to retrain or learn new skills.
“The data appears to point to a slowdown in the pace of recovery,” he said at a press conference on Wednesday after the Fed’s monetary policy meeting.
Already millions of Americans are struggling to put food on the table. According to the Census Bureau’s weekly household survey released Wednesday, about 24 million Americans said they “sometimes didn’t have enough to eat,” with 5.4 million saying they “often” didn’t have enough to eat. eat.
“The fact that initial jobless claims have risen for the second week is troubling and underscores that the nascent recovery in consumption is at risk,” said Madhavi Bokil, Moody’s vice president. “In particular, the termination of federal unemployment insurance supplemental benefits of $ 600 per week would create an abyss of income for unemployed workers.”
The additional $ 600 per week in benefits reserved as part of the CARES Act for Americans without a job expires at the end of the month. For many families, the extra money has been a lifeline, covering food, shelter, and even life-saving medications. Congress is still stagnant on whether to extend the benefit, and some lawmakers argue that the size of the payments removes the incentive to work.
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As the debate continues in Washington, rents are due this weekend, and by the end of the year, 29 million Americans could face eviction, according to the COVID-19 Defense Against Eviction Project, a defense association with the Institute. Aspen and the Bell Policy. Center.
Diane Swonk, chief economist at Grant Thornton, said the Fed is clearly more concerned with the economy than a month ago.
“The resurgence of COVID-19 cases and the impact it has on the economy is fueling the anxiety of the Fed. Powell is willing to do more, but is limited, and he needs Congress to take action,” Swonk said.
