Uptick in Jobless Claims Suggests US Economy Could Be Slow to Recover
Another uptick in the number of jobless claims, coupled with a record contraction in the country’s gross domestic product, has signaled that the United States economy could be slow to recover amid the coronavirus pandemic.
According to the Department of Labor, more than 1.43 million people filed for unemployment benefits in the week ended July 25. Although economists had forecasted 1.45 million claims last week, it marks the second consecutive week that the number of applications has increased and the 19th week in a row that the country has recorded more than a million jobless filings.
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What’s more, the Commerce Department reported that the U.S. GDP dropped at a 32.9% annualized rate in the second quarter — a 9.5% fall from the prior year’s quarter and the steepest in records dating back to 1947. Before the pandemic pummeled economies around the world, the average U.S. GDP hovered at around 2%, but government-imposed lockdowns and stay-at-home orders led businesses to temporarily close their doors and curtailed production as well as consumer spending.
Although state and local officials have largely moved forward with their reopening plans, a surge in new COVID-19 infections — particularly in Arizona, California, Florida and Texas — have resulted in reinforced restrictions. Stores and offices that had just begun to rehire their workers were forced to shut down again, pushing more Americans back to unemployment.
The increase in claims also comes a day before millions of people in the U.S. will no longer be able to take home an additional $600 a week in benefits on top of what they get from their state, which averaged about $372 a week at the end of February. The funding, which is part of the $2.2 trillion Coronavirus Aid Response and Economic Security Act, or CARES Act, was introduced at the end of March.
A follow-up measure, called CARES Act 2, was proposed by Senate Republicans early this week and is set to go up for debate in the Democrat-led House of Representatives. The bill is expected to include another $1,200 in direct payments to eligible individuals, as well as an extension to unemployment benefits, liability protection for businesses and tax incentives to encourage Americans to get back to work.
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