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Another 870,000 Americans have filed for first-time unemployment benefits last week, according to the United States Department of Labor. The number of unemployed people is still stubbornly high, but lower than the high point of almost 7 million people seeking benefits back in March.
This is the 27th consecutive week of historically high jobless claims. As of the week ending Sept. 5, about 26 million Americans have received some type of unemployment benefits. To put things into perspective, 665,000 people filed for unemployment at the peak of the 2007 to 2009 financial crisis—the Great Recession.
Daniel Zhao, senior economist at Glassdoor, the large job aggregation and company-ratings site, said, "Claims remain stagnant at high levels, which is a difficult reality for millions of workers six months into the pandemic."
The high rate of people seeking benefits reflects that the economy is still hurting and the initial impact of the multitrillion-dollar federal government stimulus packages have run its course. There are calls for another round of financial support for people through new stimulus packages. So far, the Democrats and Republicans haven’t been able to reach any agreements.
Jerome Powell, the chairman of the Federal Reserve Bank, raised the issue of getting approval for more fiscal stimulus on Wednesday, telling Congress, “We’ve come a long way pretty quickly, and that’s great. But there’s a long way to go. So I just would say we need to stay with it, all of us. The recovery will go faster if there’s support coming both from Congress and from the Fed.”
While the economy has gained back roughly half of the jobs lost since the pandemic started, the pace of hiring has seemed to lose steam. Ryan Sweet, an economist at Moody’s Analytics, said, “We’re getting to that point where the easy hiring is behind us.”
Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note to clients this week, “The current picture suggests that growth has slowed sharply in the past three months, and that the labor market is stalling again in the face of rising infections and the sudden ending of federal government support to unemployed people.”
Although the stock market—up until recently—has been hitting new highs, the real economy doesn’t reflect the vaulted valuation of stocks. There has been a steady drumbeat of well-known and long-standing companies filing for bankruptcy protection, furloughed jobs becoming permanent job losses and new job cuts announced, in an array of different industry sectors that range from airlines to Wall Street banks. Families are very concerned now that the federally enhanced $600 weekly unemployment benefits supplement ended in July. There are increasing worries over a second wave of Covid-19 and its impact on the economy and job market.
Peter Boockvar, chief investment officer at Bleakley Advisory Group, described the jobs report, “Bottom line, we have a mix of people going back to work because they are now greater incentivized to do so without the extra $600 per week and those that are still challenged in finding a job that matches their skills in this unfortunate pandemic landscape.”
One area may offer a double-sided positive outlook. A large portion of the jobless claims have been made through the Pandemic Unemployment Assistance program. State officials have alleged that the PUA program has been plagued with fraud. Therefore, the numbers may be inflated. On the other side of the equation, some states are saying that they’re still dealing with delays in processing claims, which suggests that there is a large number of people who are out of work, but not officially in the data.
It's clear that something needs to be done to turn things around. Even though we’re in the heat of an acrimonious presidential election, our elected leaders need to put aside petty differences and work toward an intelligent stimulus package to help improve the economy, along with a strategic approach toward creating new jobs. The longer they wait, the American public is put at greater risk of losing more jobs, closing their businesses and eating into their scant savings.
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September 24, 2020 at 10:32PM
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A ‘Difficult Reality’: 870,000 Americans Filed For Unemployment Last Week - Forbes
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