US recovery looks shakier with unexpected rise in jobless claims

US recovery looks shakier with unexpected rise in jobless claims

This is not the turn anyone wants to see the United States jobs market taking.

The number of applications filed with states for unemployment benefits rose unexpectedly last week to 898,000, the US Department of Labor said on Thursday.

That’s 53,000 more than the previous week.

Jobless claims are a proxy for layoffs, so the data signals not only that layoffs remain widespread – roughly four times greater than pre-pandemic levels in February – but that they are moving in the wrong direction for an economic recovery.

With less than three weeks to go until the November 3 US elections, there is a growing body of evidence that the economic recovery is stalling for the nation as a whole, and exacerbating inequalities by failing to carry all Americans out of the hole dug by COVID-19.

The general consensus among economists is that the economic rebound is starting to plateau because crucial pandemic relief aid programmes from Congress have expired, including the $600 federal weekly top-up to state unemployment benefits and the programme to help small businesses keep workers in jobs.

As the election draws near, partisan acrimony in Washington continues to be too great a hurdle to overcome for the White House and lawmakers in Congress to pass a new round of virus relief aid.

Democrats in the House of Representatives, led by Speaker Nancy Pelosi, passed a $2.2 trillion stimulus bill, while the White House has floated a $1.8 trillion proposal.

Earlier this month, President Trump called off stimulus talks, only to reverse course hours later and urge Congress to pass targeted relief including a package for the nation’s struggling airlines that are laying off tens of thousands of workers, and a new round of $1,200 direct cash payments to US households.

But the deadlock remains and hopes for a breakthrough before November 3 are all but dead.

That is a tough blow for the nation’s jobless.

Some 22 million Americans were thrown out of work back in March and April, as lockdowns swept the nation. By September, only 11.4 million of those jobs had been recovered.

Increasing numbers of layoffs have turned into permanent job losses. And though the nation’s unemployment rate has fallen from its pandemic April high of 14.7 percent to 7.9 percent in September, it is more than double February’s pre-pandemic level of 3.5 percent.

The number of workers receiving benefits from state and federal programmes – a metric that lags weekly jobless claims – dropped to 25,290,325 for the week ending September 26.

That number likely overstates the true number of people collecting jobless benefits due to double-counting between the state and federal programmes. Still – to put it in perspective – there were only 1.4 million people claiming benefits in the comparable week in 2019.