USA

Workers filed 1.5M unemployment claims as infections spike

New unemployment claims continued to roll in last week at historically elevated levels, as American workers filed 1.5 million initial applications for aid, the Labor Department reported on Thursday.

On top of that, more than 760,000 people applied for benefits under the new temporary Pandemic Unemployment Assistance program created for those ineligible for traditional unemployment benefits like gig workers and the self-employed. While economists caution that there is likely overlap, added together, the number of new claims filed last week could be well over 2 million.

The number of workers still seeking unemployment more than three months into the pandemic has sparked doubt among many economists that the U.S. is on the road to a speedy recovery as President Donald Trump has proclaimed.

“The tens of millions that remain unemployed are an increasingly important signal of labor market weakness," Glassdoor Senior Economist Daniel Zhao wrote in reaction to the report. "The labor market’s path to recovery is littered with obstacles that could smother the rebound, from the expiration of federal support for businesses and workers to depressed consumer demand to the resurgence in Covid-19 cases.”

California reported the largest number of claims last week, with 243,344 new applications filed. Georgia, one of the first states to reopen its economy in April, followed with 130,766 new claims.

The economic recession triggered by the pandemic has led to nearly 46 million new applications for unemployment aid in a little over three months. But that number likely includes duplicate applications, as some states have instructed workers to reapply if they were first found ineligible.

Heidi Shierholz, a senior economist at the Economic Policy Institute, suggested that the number of workers currently receiving benefits or waiting for them is probably closer to 34.5 million. That number includes the workers who have filed “continued claims” — or those who are still seeking unemployment benefits for another week.

That translates into more than one in five workers relying on the unemployment system to weather the pandemic, according to Shierholz.

Federal Reserve Chair Jerome Powell on Tuesday warned that the economy can’t fully recover until the public is sure the coronavirus has been contained.

Recent spikes in Covid-19 cases in areas that restarted their economies have also caused some states and localities to hit the brakes on their reopening plans.

Trump has seized on recent positive economic indicators to make the case that the country is headed for a sharp rebound. U.S. retail sales jumped 17.7 percent in May, the Commerce Department reported this week. And the unemployment rate unexpectedly dropped to 13.3 percent that month, down from 14.7 percent in April — a rate still not seen since the Great Depression-era of the 1930s.

Labor Secretary Eugene Scalia brushed aside comparisons to the Depression in a speech to the Heritage Foundation's National Coronavirus Recovery Commission this week.

"We came into our current economic difficulty by a completely different path than prior downturns: It was self-imposed, and purposely short-term," Scalia said. "It did not result from an economic weakness — the economy had been very strong. The comparisons to the Great Depression have always been misplaced — our circumstance is different."

Some economists have attributed the better-than-expected economic numbers to the multitrillion-dollar relief programs that Congress created to bolster small businesses and American bank accounts.

But laid off workers will soon lose the enhanced unemployment benefits provided as part of that aid.

A $600 additional weekly unemployment benefit created under the massive relief package passed in March will expire on July 31, and Republicans have been opposed to extending it.

In a semiannual report to Congress last Friday, the Fed warned that a wide variety of data indicate "an alarming picture of small business health during the Covid-19 crisis,” and suggested small businesses may need more government support.

Yet with police reform taking up much of the discussion on Capitol Hill, Republicans aren’t expected to move on another package for weeks.

White House trade adviser Peter Navarro said over the weekend that Trump is looking for at least $2 trillion in the next round of relief.

But Senate Majority Leader Mitch McConnell wants to see a much lower price tag.

Democrats have already forged ahead with another round of aid. The House passed a $3 trillion measure last month, which would provide direct relief to American families and state, local and tribal governments.

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