By Countercurrents Collective
In the U.S., the number of people who filed for unemployment benefits rose for the second consecutive week last week as coronavirus cases surged around the country. The number of people collecting jobless benefits also increased to 17 million, up from 16.2 million the week prior.
More than a million people filed for unemployment benefits in the latest week, showed U.S. Labor Department data on Thursday. The data is the evidence of the ongoing pandemic’s disastrous impact on the U.S. economy. At least 54 million jobless claims have been filed since the coronavirus pandemic began biting the U.S. economy.
The new unemployment claims have exceeded 1 million for 19 consecutive weeks, with well over 50 million now out of the workforce.
Following are the main findings from the report, compared to consensus estimates compiled by Bloomberg:
- Initial jobless claims, week ended July 25:434 million vs. 1.445 million expected and 1.416 million during the prior week
- Continuing unemployment claims week ended July 18: 01 million vs. 16.2 million expected, 16.197 million during the prior week
The unemployment data is yet another sign that “the economy has lost momentum in recent weeks as the spread of COVID-19 intensified in many areas,” wrote JPMorgan Chase economist Daniel Silver in a research note on Thursday.
The tick higher in jobless claims “Was the second straight weekly increase, and while the recent increases have been relatively modest (by COVID-19 standards), they marked the end of a run of fifteen straight weekly declines for the claims data,” he added.
Continuing claims have been closely watched by Wall Street as an indicator of how well the job market is healing. The jump to 17 million in the latest week bodes ill for the recovery, given that it was the first weekly rise in that category since late May, Silver pointed out.
It also suggests a “net increase in the number of unemployed people during the week ending July 18, although other factors beyond employment status can influence the data, including rules about eligibility,” he added.
The U.S. economy’s contraction in the second quarter was the worst on record
A report by The New York Times said on July 30, 2020:
“Economic output fell at its fastest pace on record last spring as the coronavirus pandemic forced businesses across the United States to close their doors and kept millions of Americans shut in their homes for weeks.
“Gross domestic product — the broadest measure of goods and services produced — fell 9.5 percent in the second quarter of the year, the Commerce Department said Thursday. On an annualized basis, the standard way of reporting quarterly economic data, G.D.P. fell at a rate of 32.9 percent.”
The report said:
“The collapse was unprecedented in its speed and breathtaking in its severity. The only possible comparisons in modern American history came during the Great Depression and the demobilization after World War II, both of which occurred before the advent of modern economic statistics.
“Unlike past recessions, this one was a result of a conscious decision to suspend economic activity to slow the spread of the virus. Congress pumped trillions of dollars into the economy to sustain households and businesses, limit long-term damage and allow for a rapid rebound.
“The plan worked at first. In recent weeks, however, cases have surged in much of the country. Data from public and private sources indicate a pullback in economic activity, reflecting consumer unease and renewed shutdowns.
“‘In another world, a sharp drop in activity would have been just a good, necessary blip while we addressed the virus,’ said Heather Boushey, president of the Washington Center for Equitable Growth, a progressive think tank. ‘From where we sit in July, we know that this wasn’t just a short-term blip.’”
A report by Fortune said on July 13, 2020:
The Federal Reserve Bank of Atlanta projects that GDP dropped a record –35.2% in the second quarter. Put simply: No event in American history has wrecked the U.S. economy faster than the pandemic-driven recession, or pancession for short.
But even before we get that official GDP number, the economy might already be turning the corner. The unemployment rate shot up from a 50-year low of 3.5% in February to a staggering 14.7% in April, but has since fallen two consecutive months coming in at 11.1% in June.
Near-zero interest rate
The U.S. Federal Reserve (Fed) on Wednesday held interest rate at near-zero as the central bank continues efforts to support a recovery. However, Fed Chair Jerome Powell said high-frequency data pointed to an economy that appears to have slowed since COVID-19 cases began surging in mid-June, adding to an infection count of nearly 4.5 million and killing over 150,000.
“On balance, it looks like the data are pointing to a slowing in the pace of the recovery,” Powell said — adding that consumer surveys appear to be “softening again,” while labor market indicators pointed to a slowing of job growth, particularly among small businesses.