Paul Davidson, USA TODAY
Published 8:33 a.m. ET Aug. 20, 2020 | Updated 3:41 p.m. ET Aug. 20, 2020
The orders Trump signed would provide an extra $400 in unemployment benefits, suspend some student loan payments and protect renters from eviction.
A gauge of U.S. layoffs rose back above 1 million last week, signaling the recovery from the COVID-19-induced recession will remain volatile as recent infection surges ease in some states but persist in others.
About 1.1 million Americans filed first-time applications for unemployment insurance, the Labor Department said Thursday, up from 971,000 the prior week and more than the 920,000 expected by economists.
A mind-boggling 57.3 million workers now have filed for unemployment over the past 22 weeks. Before the pandemic, the previous all-time high for weekly claims was 695,000 during a recession in 1982.
The good news is that continuing claims, which represent all Americans still receiving benefits with a one-week lag, fell sharply to 14.8 million from 15.5 million the previous week. Economists have been focusing more on that number because if reflects all those still unemployed and accounts for people who have returned to work as businesses have reopened. That figure has dropped by more than 2 million the past three weeks, indicating that many laid-off workers are being rehired.
Jobless claims remain ‘extraordinarily high’
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“However, the number of individuals claiming benefits remains extraordinarily high – more than twice the peak of the great recession – underscoring that the labor market is a long way from being healthy,” economist Nancy Vanden Houten wrote in a note to clients.
Initial jobless claims, a measure of layoffs, have fallen but remain elevated. (Photo: Photo by Andrew Lichtenstein / Corbis via Getty Images)
The 135,000 increase in initial claims follows two weeks of 200,000-plus drops. The numbers have been volatile in part because of a spike in coronavirus cases in July, particularly in the South and West. States that allowed shuttered businesses to reopen early had to pause or reverse those plans, slowing or halting the rehiring of laid off-workers and spurring another round of job cuts at many restaurants, shops and other businesses.
The recovery from those flare-ups has been uneven. COVID-19 cases generally have trended lower across the U.S. recently and the share of positive tests has fallen in Arizona and Texas, two hot-spot states, Goldman Sachs wrote in a research note.
But cases remain high in Florida and Georgia, Goldman notes. And the resumption of in-person classes at some universities has sparked fresh outbreaks.
Meanwhile, Congress remains deadlocked over a proposal to extend a $600 federal weekly supplement to state unemployment benefits that expired July 31. Democrats want to continue the bonus into next year. President Donald Trump has signed an executive order to provide the additional $400, but asked states to cover $100 of that cost. It’s unclear whether Trump has the authority to extend the benefit without legislation, and it could take months for states to implement it.
Julie Antoine’s struggles to receive unemployment benefits during the pandemic have been an emotionally-wrenching roller coaster. Antoine, 59, of Gainesville, Florida, lost her job as a corporate travel agent in mid-March after a nearly 40-year career in the field as business trips abruptly vanished.
Antoine waited about five weeks before she got her first paycheck because of the state’s swamped phone and computer systems, forcing her to rely on the city for assistance with her power and water bills and on family and friends to pay phone, internet, cable and cellphone bills. She also qualified for food stamps.
‘I kind of shut down’
“I kind of shut down,” she says. “There has never been a period in my life when I wasn’t working.”
After she finally received benefits, including the $600 federal supplement, she was able to pay her bills and began ordering occasional takeout dinners and making a few online purchases of furnishings for her home. But after the $600 was phased out at the end of July, Antoine has been getting just $275 a week in state benefits. She has cut out such discretionary spending and is again depending on friends and family for help with the monthly bills.
She has looked for travel jobs, but few are available.
“What can I do?” she says. “I can’t at this age go work at McDonald’s or work at Walmart as a greeter.”
And while her bank has deferred mortgage payments on her three-bedroom ranch house for up to a year, “I still have to find a way to (eventually) pay all that’s accumulated every month…Where am I going to come up with the money?”
Noting travel will likely be the last sector to bounce back, she adds, “There’s no immediate prospects for getting back into the industry. What are we going to do long-term?”
Not seeking unemployment
The expiration of the $600 may have led many workers to forgo filing initial claims, JPMorgan Chase says, distorting the reading on U.S. layoffs provided by the report in recent weeks. Trump’s restoration of part of the benefits may have contributed to last week’s rise in claims, Van Houten says, as states are being approved to pay the supplement.
Last week, initial claims rose by about 11,000 in New Jersey, 10,000 in New York, 9,000 in Texas and 5,000 in Florida. Meanwhile, claims fell by about 4,000 in Nevada as well as Georgia.
An additional 543,000 people filed initial claims under a separate program that expands eligibility to the self-employed and independent contractors, among others, during the crisis. About 11.2 million Americans were already receiving unemployment checks under that program, known as Pandemic Unemployment Assistance.
The latest claims totals could be significant because they represent the first since the government closed the window for applications for forgivable federal loans to small businesses that retain or rehire employees, Nomura economist Lewis Alexander says. Also, the vast majority of businesses have exhausted the money they received under that initiative, known as the Paycheck Protection Program, prompting some struggling businesses to lay off more workers.
At the same time, Barclays says recent initial claims figures may be inflated by state backlogs and duplicate applications. In addition, the totals don’t capture layoffs only. Furloughed workers and those with reduced hours also can apply for benefits during the crisis.