1.3 million more Americans filed for unemployment benefits last week, more than expected, and basically unchanged from the previous week’s total, which was revised slightly lower to 1.31 million.
The latest figures appear to underscore ongoing pain in the labor market, which could be roiled anew later this month if lawmakers fail to extend extra federal unemployment benefits credited with helping bridge the income gap for millions of Americans.
Jobless claims have remained sticky, suggesting flashy gains seen in the last two monthly payrolls reports could be a false dawn.
The four-week moving average for initial claims (orange line in the figure) moved lower to 1,375,000.
Continuing claims were 17.34 million, essentially in line with estimates (it’s actually a beat at the margins). The previous week’s total was revised lower to 17.76 million. This is ostensibly good news, but the pace of the decline is maddeningly slow.
On initial claims, it’s the same story — they’ve stopped falling. I say that every week, but now it can be taken almost literally. This week’s drop represents the smallest decline since March (figure below).
Once again, I would note that reinstated containment measures across states witnessing large spikes in COVID-19 cases could very well mean more layoffs are in the cards. As Bloomberg notes, “of states that have seen recent increases in virus cases, California, Florida, and Arizona all saw increases in initial claims on an unadjusted basis”. Some small business owners are giving up in the new round of lockdowns.
Notably, total claimants in all programs fell 433,000 to 32,003,330 in the week ending June 27, which is good news, as it at least reduces the disparity between the “official” number of unemployed Americans and those claiming benefits of some kind.
That gap (still huge) is the subject of some debate. You can read (much) more in “You’re Looking At The Wrong Unemployment Data, One Bank Warns“.
The bottom line is that Congress would do well to get moving on the next virus relief package and ensure it contains some manner of extra protection for the unemployed. Because claims suggest the situation has stopped improving altogether, and the July jobs report may confirm as much.
I’ll be filing next week, large firms are starting to realize that Furloughs are a nice tool to up profitability while keeping employees around for the future. Taking a few weeks unpaid the next step before massive layoffs or pay cuts. The hits to the economy are just starting to manifest in the long term mode after the initial shocks, much like when the titanic hit that iceberg… you ended up with a lot of people in the ocean… not all of those initial survivors make it to actual safety.