Nearly four months after the Covid-19 pandemic ravaged the health of Americans, their economy and their labor market, the upswing in economic data is tapering off.
A resurgence in infections and a rollback of reopening plans in several states is making it difficult for people to re-enter the labor force following the pandemic lockdown — and it could derail the vulnerable US economic recovery.
Stripping out seasonal adjustments, the number of initial claims is slightly lower than the adjusted figure, but it still rounds up to 1.4 million. During normal times, the seasonal adjustments help smooth the data, but during the pandemic it has been less helpful.
On top of regular claims for unemployment benefits, nearly 1 million people across 49 states applied for pandemic unemployment assistance, a program Congress rolled out as part of the government’s Covid response. It provides benefits to workers who aren’t typically eligible, such as freelancers and the self-employed. The program stands to expire at the end of the year.
“The rising unemployment claims are a deeply concerning sign as the $600 weekly unemployment benefits soon expire for tens of millions of unemployed Americans,” said Glassdoor Senior Economist Daniel Zhao in emailed comments.
An estimated 25 million Americans are receiving the extra payments on top of their state unemployment benefits, and it’s pumping an additional $15 billion into the economy, according to The Century Foundation, a progressive nonprofit think tank.
Lawmakers are looking at a range of options. Democrats would like to continue the $600 weekly boost into 2021 and included such a provision in the House relief bill passed in May.
But businesses are worried that they are having trouble bringing workers back because the Congressional boost pays many recipients more than they made while employed.
Phil Mattingly, Lauren Fox and Ted Barrett contributed to this report.