Hundreds of unemployed Kentucky residents wait outside the Kentucky Career Center for help with their unemployment claims late last week in Frankfort.
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A downward trend in first-time unemployment insurance claims stagnated in the past week, showing how long it will take for tens of millions of unemployed Americans to return to work as the coronavirus pandemic continues to shake up the US economy. U.S.
The Labor Department said Thursday that seasonally adjusted unemployment claims were 1.5 million in the week ending June 20, little change from the previous week’s level. Economists surveyed by FactSet expected a decline to $ 1,325 million.
Since unemployment claims skyrocketed when nationwide blockades began in March and April, they have remained staggeringly high, but the pace of new claims has steadily slowed. The weekly claims report only shows one side of the job picture (not including hiring, which unexpectedly increased by 2.5 million in May), but the fact that unemployment continues to rise is the latest news to unsettle investors. On Wednesday, the IMF cut global growth forecasts and said the recovery would be longer than expected in April, citing larger-than-expected shocks to consumption and investment from the pandemic.
US stocks opened lower on Thursday, with the S&P 500 at 0.3% and the Dow Jones Industrial Average at 0.4%.
At the same time, Covid-19 cases are on the rise. More than 36,000 new cases were reported Wednesday, an increase that has caused companies across the country to reconsider or halt their reopening plans. Walt Disney (ticker: DIS), for example, said it would indefinitely delay the reopening of its Disneyland Resort that it had previously scheduled for July 17.
The latest initial unemployment claim data shows a picture of a struggling job market, says Greg Daco, chief economist at Oxford Economics in the United States. Initial claims fell only slightly from last week, reminding us that layoffs in some areas remain widespread, he says, while the number of people receiving any type of benefit remains at an extraordinarily high level. At the same time, the title number on unemployment claims does not include people, such as concert workers, who receive pandemic emergency benefits. That number in the past week increased by 1.7 million to its highest level yet.
One silver lining in the report is that continued claims for unemployment benefits fell in the most recent week. Continuing claims declined to 19.5 million from 20.3 million, slightly below the 20 million that economists had expected and the first time claims fell below 20 million since April 17. While the decline suggests that some workers are being rehired, it doesn’t change the fact that the recovery in the labor market will be slow and uneven, Daco says.
Some economists warn that from here, unemployment will rise again. New cases of the virus are emerging in Arizona, but they are also on the rise in places like Pennsylvania, says Ian Shepherdson of Pantheon Macroeconomics.
The danger now is that claims are rebounding in other states where infections are rising rapidly, he says, adding that people are once again starting to stay away from restaurants and shopping malls. “Our preliminary estimate for next week is that claims will change little, that’s pretty bad given that the worst week after the 2008 collapse was 665K, but our forecast is much more likely to increase than fall,” says Shepherson.
A positive aspect of the deteriorating unemployment situation is that a renewed increase in layoffs could ease the passage of additional fiscal stimulus in Washington. In particular, the enhanced unemployment insurance (the additional $ 600 a week approved as part of the Care Act) will expire in late July. The extra money has helped bridge the income gap caused by closings and layoffs, but economists, in addition to Federal Reserve Chairman Jerome Powell, have warned that a full expiration of sweetened benefits would serve as a blow to the recovery. .
Write to Lisa Beilfuss at [email protected]
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