WASHINGTON (AP) – The number of laid-off workers seeking unemployment benefits in the United States declined just last week, and the economy contracted in the first three months of the year, evidence of continued economic damage caused by the viral pandemic.
The economy, which contracted 5% in the January-March quarter, it is expected to decrease at an annual rate of approximately 30% in the current April-June quarter. That would be the worst quarterly contraction by far since record keeping began in 1948.
The government reported Thursday that the number of laid off workers who applied for unemployment benefits decreased slightly to 1.48 million. last week. It was the twelfth consecutive fall. Still, jobless claims have declined by just 5% in the past two weeks, a much slower rate of improvement than in April and May.
What’s more, an additional 700,000 people applied for unemployment benefits last week under a new program for freelancers and workers that made them eligible for aid the first time. These figures are not adjusted for seasonal variations, so the government does not include them in the official count.
The steady, albeit slow, decline in applications suggests that the labor market is gradually recovering from the pandemic, which closed businesses and sent the unemployment rate down to 14.7% in April, its highest level since the Great Depression. . The total number of people receiving unemployment aid also fell last week, to 19.5 million from 20.3 million, evidence that employers are rehiring some of the workers who had been laid off since mid-March.
In addition, the government said Thursday that durable goods orders rose nearly 16% in May, reflecting a pickup in some business activities. Still, the pace of orders and shipments remains well below pre-pandemic levels. And excluding the volatile transportation category, so-called core durable goods orders rose only modestly last month, reflecting still slow business investment.
The latest economic figures coincide with a sudden resurgence of COVID-19 cases in the United States, especially in the South and West, which threatens to derail a nascent economic rebound. On Wednesday, the nation set a record for new cases of coronavirus. Many states are establishing their own daily infection registries, including Arizona, California, Mississippi, Nevada, Texas, and Oklahoma. Coronavirus cases have also increased in Florida and Georgia.
If those trends continue, states can re-impose some limits on companies that are likely to cause job cuts. Whether by choice or by government order, fewer consumers would shop, travel, eat, and visit bars or gyms. All of these scenarios would lead to renewed layoffs and hamper the economy.
Nervous investors sent stock prices plummeting on Wednesday over growing fears that the economy will suffer further damage from the disease.
“The health crisis continues to cast a dark shadow on the economic outlook,” said Bob Schwartz, an economist at Oxford Economics, a forecasting company.
Before this week’s growing concerns about the pandemic, many economists had been relatively optimistic. In May, the unemployment rate dropped unexpectedly, albeit to still high 13.3%. Consumers began spending again, sending retail sales that jumped in record amounts. And new home sales increased as low mortgage rates registered buyer interest.
In May, employers added 2.5 million jobs, a surprising gain. Still, that hiring accounted for only a ninth of all the jobs that have been lost since the pandemic occurred. And nearly 30 million Americans are still unemployed.
The economy contracted at an annual rate of 5% in the first three months of the year, the government estimated on Thursday. However, economists forecast a much sharper decline in the April-June quarter, a rate of up to 30%, which would be the worst since record keeping began in 1948. Analysts expect the economy to recover in the second half of this year before potentially regaining its pre-pandemic level in late 2021 at the earliest.
However, all of this means that the pandemic does not intensify, forces the general closure of businesses again and makes the labor market and the economy fall further. If you do, the damage could be serious.
For now, real-time data on small businesses suggests that the economy’s improvement slowed in June compared to May, and then stalled last week in some states that reopened their economies as soon as possible.
Homebase, a company that provides scheduling and time tracking software to small businesses, says the proportion of small businesses that have reopened has stabilized.. As of Monday, 78% of the small US businesses it tracks were open, with little change from the previous week. In Florida and Texas, the proportion of small businesses that have actually closed has increased as a result of resurgent viral outbreaks.
Apple said Wednesday night that it would re-close seven of its stores in the Houston area, which is experiencing a spike in cases. Last week, she had said she would close 11 other stores in four states again.
Goldman Sachs economists have improved their economic forecasts for the rest of this year and next year in light of retail sales gains and other positive data. But they cautioned that a “significant” second wave of cases this fall that would force business closings could cut growth next year by more than half.
For the unemployed, the federal government has been providing $ 600 in weekly benefits, in addition to what state unemployment aid recipients receive. This federal money has injected almost $ 20 billion a week into the economy and has allowed many unemployed to stay afloat.
Most recipients even earn more than they did in their old jobs, raising concerns that this may discourage some of them from returning to work. But the $ 600 a week in aid will expire after July, and Trump administration officials have said they oppose an extension. Republicans and Democrats in Congress have introduced compromise measures.
The $ 600 a week has been a huge help to Alexis O’Neill, who was fired in March from an accounting job at an aviation fuel company. O’Neill, 49, who lives with her mother in Ann Arbor, Michigan, is looking for a job that allows her to work from home to prevent her mother from risking contracting the virus.
You have applied for at least a dozen jobs, but have received no responses, except an acknowledgment of your application. Many open jobs now appear to offer lower wages than before the pandemic. To compound the O’Neill dilemma, Michigan is caught up in the nation’s second highest state unemployment rate, 21.2%.
“The job market is terrible,” he said. “Everything is worth so much or does not bring benefits.”