US home sales and jobless claims underscore rising inequality

Millions of Americans are being left behind by an economic recovery that is deepening inequality.

Though 23 million Americans are collecting unemployment benefits, the housing market remains red hot, with sales of existing homes rising to levels not seen since the housing bubble peak in 2006 [File: Michael Conroy/AP]

Layoffs in the United States are still way above pre-pandemic levels, but at least they are moving in the right direction.

Still, they are not falling fast enough to make an appreciable dent in wealth and income inequality – both of which have widened considerably as a result of the pandemic.

Two snapshots of the nation’s economy released on Thursday furnished more evidence of this trend.

First, layoffs.

The number of Americans filing for unemployment benefits with states – a proxy for layoffs – fell to 787,000 for the week ending October 17, the US Department of Labor said on Thursday.

That is 55,000 fewer than the previous week’s revised level. And much better than most analysts were expecting.

Jobless claims were also revised down for the week ending October 3 to 767,000 – marking the lowest level since applications started spiking with the onset of lockdowns.

Falling jobless claims are certainly better than rising ones. But last week’s number is still nearly four times higher than the average level for February.

And the number of people collecting jobless benefits from state and federal programmes was in excess of 23 million at the start of this month. Though more than a million lower than the previous week, that is blisteringly high.

All of this underscores the challenging environment facing Americans who are pounding the pavement looking for work.

By the close of September, the economy had only recovered a little over half of the 22 million jobs lost during March and April. Many layoffs have turned into permanent job losses and as last week’s claims demonstrate, furloughs remain widespread.

For Americans who do have a job, though, and own their own home or want to move or buy one, things are looking pretty bright.

The National Association of Realtors said on Thursday that sales of previously owned homes grew for a fourth consecutive month in September, with completed transactions rising to an annual 6.54 million units- the highest level in 14 years.

The report signals that the US housing market remains red hot – even in a month when housing sales traditionally start to slow down.

But rock bottom mortgage rates and people who can afford it upgrading to bigger and better digs are keeping the housing market hot.

“I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home,” said National Association of Realtors chief economist Lawrence Yun.

The inequality rooting itself deeper into the US economy could not be starker. Millions of Americans are struggling and looking for work, while others are looking for holiday homes.

But even those on the winning end of this economic recovery could be in for troubled times if this very unequal bounceback derails.

Economists, including Federal Reserve Chairman Jerome Powell, have warned that the US economic recovery could be jeopardised without another round of virus relief aid to help businesses and workers who are still wrestling with the pandemic’s financial fallout.

But the White House and Democrats in Congress have been unable to break their continuing stalemate over a new round of stimulus.

And though Treasury Secretary Steven Mnuchin and Democratic leader, House Speaker Nancy Pelosi continue to talk, it is unlikely they will strike a deal in time to pass a new package before the November 3 election.

Which means whoever proves victorious when the ballots are counting will inherit an economy that is leaving millions of Americans behind.

Source: Al Jazeera