US jobless claims take a turn for the worse as layoffs rise

The number of US workers filing jobless claims climbs back above one million as coronavirus spikes disrupt recovery.

Jobless claims US
The long road back to pre-pandemic strength combined with stalled reopening plans in areas of the country where new COVID-19 infections remain high have shrouded the economic outlook in uncertainty [File: Nam Y. Huh/The Associated Press]

The number of workers in the United States filing for state unemployment benefits climbed back above one million last week, signalling that businesses continue to lay off workers as the economy struggles to climb out of the deep recessionary hole dug by the coronavirus pandemic.

Some 1.1 million Americans filed initial jobless claims with states in the week ending August 15, the Bureau of Labor Statistics reported on Thursday. That is 135,000 more than the previous week when the number fell below one million for the first time since March.

Claims for jobless benefits under the federal Pandemic Unemployment Assistance programme also rose last week.

The number of Americans currently collecting jobless benefits from states – a figure known as “continuing claims” edged down slightly to 14.8 million. Those figures lag initial claims by a week.

Between state and federal programmes, some 28 million Americans were collecting jobless benefits for the week ending August 1 – a decline of 197,601 from the previous week.

Taken together the data underscores that while some areas of economic activity, such as housing construction, are grinding back to life, the pace of the recovery is glacial compared with the sharp, stomach-bottoming plunge that drove the economy into its deepest contraction on record in the second quarter.

The long road back to pre-pandemic strength and stalled reopening plans in areas of the country where new COVID-19 infections remain high have shrouded the business outlook in uncertainty.

Two-thirds of US economic growth is driven by consumer spending. That needs to kick into higher gear for employers to keep and add workers to their payrolls, including rehiring those who have been laid off.

For the millions of Americans collecting unemployment, times are only getting tougher. The $600 federal  weekly top-up to state benefits expired last month.  And though President Donald Trump issued an executive order for a replacement $300 a week federal top-up bankrolled by the government’s disaster relief fund, only half of states so far have said that they will be applying for that additional aid.

Two states – South Dakota and Mississippi – have said they will not be applying for it. Other states are still mulling it over.

One factor that could be contributing to the foot-dragging – Congress could still pass a new round of virus relief aid with a federal jobless benefits supplement that will not necessitate changes to state computer systems that would need to be overhauled to implement the supplement under Trump’s executive order.

But Democrats and Republicans in Congress are at loggerheads over a new stimulus package.  With the US presidential election kicking into high gear this week and next with the Democratic and Republican nominating conventions, partisan lines show little sign of softening.

Source: Al Jazeera