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Applications for unemployment benefits within the United States were consistent last week. The expectation is job losses will continue to be extensive due to COVID-19. During the week ending on September 5th, there were no changes in jobless claims regarding the state programs. According to the Department of Labor, the number remained at $884,000. As the claims continue, there was an increase in the number of individuals using these programs to file for unemployment resulting in an increase to 13.4 million from 93,000 million as of August 29th.
The result is additional job losses within the United States. According to a survey conducted by Bloomberg, the expectation is 850,000 claims during the last week with 12.9 claims continuing. Before the pandemic, there were approximately 212,000 claims per week with 1.7 million continuing claims. The number of claims has been higher than expected, placing the recovery of the economy and the labor market at risk. Despite the businesses bringing back employees and hiring, millions of Americans are still unemployed.
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Due to the businesses cutting jobs and the difficulties experienced by small businesses due to the economy, the Senate and Congress have reached a stalemate regarding benefits for Americans without jobs. The challenges are increasing for Americans due to the end of stopgap aid initiated by President Donald Trump. In certain areas of the United States, the number of COVID-19 cases is increasing. Despite the partial reopening of the economy, the number of layoffs is higher than expected.
There are risks of more outbreaks of COVID-19 occurring during the next few weeks, making the money shortage for Americans even greater. Permanent damage may occur to the labor market with the same results as during the pre-pandemic levels. Even though the jobless figures were weaker than predicted, United States stocks increased during the open on Thursday, and Treasury yields for 10 years were higher. Prior to the season adjustments, there was approximately a 20,000 to 857,000 increase in initial claims for both Texas and California.
The increase in California may be a partial reflection of the jobs temporarily lost due to the wildfires. According to Deutsche Bank AG’s Chief U.S. economist Matthew Luzzetti, the jobless claims and money shortage remain historically high. There is currently no certainty as to which data points are driving the situation but may include:
• The additional unemployment benefits President Donald Trump authorized are running out.
• Despite the approval from Congress, the Senate vote will determine the stimulus received by the United States.
• Even as states and cities reopened many Americans chose to remain inside.
• There are hints related to the pickup in the United States the labor market might be showing improvement.
Despite this, the claims initially filed for Pandemic Unemployment Assistance have increased for four weeks in a row. This is the federal program created for the extension of unemployment benefits for individuals generally ineligible such as the self-employed. For the week prior to September 5th, there was an increase in claims of nearly 91,000 as opposed to 838,916. This is the highest number since the end of July and just 20,000 less than the total received by standard state programs.
If the claims do not begin to decline, this marks a break in the progress of the labor market since the worst of COVID-19. As of last Friday, 1.37 million jobs were added by employers in the United States for the month resulting in a decrease in unemployment of nearly two percentage points at 8.4 percent. According to the official record, this is the second-highest improvement in a one-month period. The increase for standard state initial benefits rose for the fourth week in a row. The appearance is a flattening of the recovery of the labor market short of the peak pre-pandemic.
Even if continuing claims improve substantially during the upcoming weeks and months, this might not be a true reflection of the complete picture. This is because more Americans might be exhausting typical benefits prior to being rolled into a federal program offering a maximum of 13 more weeks of benefits for the jobless. Americans numbering in the millions are heading in the direction of unemployment for a minimum of 27 weeks. The majority of states are offering jobless benefits for 26 weeks. Unfortunately, many of the individuals without a job since the end of March will reach that point this month.
During the week ending on August 22nd, claims for Pandemic Emergency Unemployment Compensation have risen to 1.42 million, an increase of roughly 29,000. According to the Labor Department, there was an increase of 380,000 Americans filing for benefits reaching 29.6 million as opposed to the 1.6 million from the previous year. COVID-19 has inflated this number resulting in one individual being counted as several different people. According to the report from the Labor Department on Thursday, there was an increase in the amount received by producers in the United States potentially leading to the restoration of pricing power.
