More evidence surfaced on Thursday of the widening divide between the haves and have-nots in the United States, with data signalling an economic recovery that is going well for the well-off while leaving millions of jobless Americans behind.
Some 860,000 Americans filed for state unemployment benefits last week, a decrease of only 33,000 from the previous week, the US Department of Labor reported.
Add in people filing for federal Pandemic Unemployment Assistance (PUA) – gig workers and self-employed individuals who are not eligible for state programmes – and the total climbs to 1.5 million Americans who applied for unemployment benefits last week.
The big picture is even more sobering. Some 29,768,326 Americans were collecting unemployment benefits in the week ending August 29. That is roughly 28 million more people than February 1. Even adjusting for millions of double counts – individuals collecting benefits from both state and federal programmes – that number is still staggering.
What this signals is that the labour market recovery is losing steam and leaving millions of out-of-work Americans fearing for their futures as the March round of economic stimulus from Congress fades and legislators on Capitol Hill remain at odds over another virus relief aid package.
While more spending stimulus remains stalled, the Federal Reserve this week reiterated its commitment to use its lending powers to try and do what it can to help the nation’s jobless get back to work.
At the conclusion of its two-day policy meeting on Wednesday, Federal Reserve policymakers indicated the Fed’s benchmark interest rates could remain near zero through 2023.
Low interest rates spur economic growth – and create jobs – by encouraging consumers to spend more, and businesses to expand.
During his post-meeting news conference, Fed Chairman Jerome Powell noted while the jobs market has staged a remarkable rebound since the unemployment rate spiked to a pandemic high of 14.7 in April, falling to 8.4 percent in August, the Fed will still have the jobless at the forefront of their policy decisions.
“Although we welcome this progress we will not lose sight of the millions of Americans that remain out of work,” said Powell.
Meanwhile, the market is primed for Americans who are working and collecting a paycheck and considering buying a house or upgrading to a bigger one.
Construction of single-family homes rose 4.1 percent in August while building permits for single-family homes – a more forward-looking gauge, rose 6 percent, the US Commerce Department reported.
Overall, housing construction declined 5.1 percent in August, but the drag was from starts of multi-family homes, like apartment buildings.
The upshot: Housing remains a bright spot in the US economic recovery, thanks to record-low interest rates that make borrowing to buy that new home cheaper, as well as remote workers looking for more comfortable cribs in the suburbs.
With less than 50 days to go until the November 3 US presidential elections, economic data will be seized upon by both sides of the political spectrum in appeals to voters.
Tens of millions of Americans are still reeling from the financial blow delivered by COVID-19.
Democratic presidential nominee Joe Biden has been touting his Build Back Better plan to voters as a blueprint for reviving the US economy while redressing long-festering inequalities, eroding job security and environmental degradation.
President Donald Trump by contrast keeps touting his stewardship of the US economy prior to the pandemic, arguing it was doing gangbusters before the “China virus” swept the nation and is already on the mend.
Voters this week received data from the US Census Bureau on the economy’s performance in 2019 – and it was stellar on several fronts.
Median household income in the US adjusted for inflation was $68,703 in 2019 – an increase of 6.8 percent from the previous year.
The national poverty rate fell to 10.5 percent last year – the lowest observed since the Census Bureau started tracking it in 1959.
Income inequality was also slightly lower in 2019 than the previous year.