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US Weekly Jobless Claims Drop, but Economic Recovery Still Elusive

WASHINGTON—The number of Americans seeking jobless benefits fell for an eighth straight week last week, likely as some people returned to work, but claims remained at astonishingly high levels, suggesting it could take the economy a while to rebound as businesses reopen.

The Labor Departments weekly jobless claims report on May 28, the most current data on the economys health, also showed a decline in the number of people receiving unemployment checks in mid-May. The data, however, excludes gig workers and others collecting benefits under a federal government program.

These workers do not qualify for the regular state unemployment insurance. The various programs, different reporting periods, and protocols at state unemployment offices make it hard to get a clear pulse on the labor market.

Economists said the governments Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion, which offered businesses loans that could be partially forgiven if they were used for employee salaries, was also creating confusion.

jobless-claims-2
People who lost their jobs wait in line to file for unemployment at an Arkansas Workforce Center in Fayetteville, Ark., on April 6, 2020. (Nick Oxford/Reuters)

“We are entering the confusion stage for the employment and unemployment numbers,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania. “Reopening of the economy is taking people from government payrolls to private sector payrolls, which is good. But the PPP is creating problems with understanding what exactly is happening.”

Initial claims for state unemployment benefits fell 323,000 to a seasonally adjusted 2.123 million for the week ended May 23, the Labor Department said. Claims have declined steadily since hitting a record 6.867 million in late March, but have not registered below 2 million since mid-March.

Economists polled by Reuters had forecast initial claims falling to 2.1 million in the latest week. Layoffs persist in the insurance, educational services, public administration, transportation and warehousing, agriculture, construction, manufacturing, and retail trade industries.

The astonishingly high level of claims, nearly three months after the shuttering of non-essential businesses to control the spread of COVID-19, points to a long recovery for the economy.

That was underscored by other data from the Commerce Department on Thursday showing business spending on equipment plummeting in April and the economy contracting at a much steeper 5.0 percent annualized rate in the first quarter instead of the previously estimated 4.8 percent pace.

Data in hand, including on the housing market, manufacturing, and consumer spending has left economists expecting gross domestic product could drop in the second quarter at as much as a 40 percent rate, the worst since the Great Depression.

A man walks past a closed business
A man walks past a closed business
A man walks past a closed business in Chagrin Falls, Ohio, on April 29, 2020. (Tony Dejak/AP Photo)

Stocks on Wall Street were trading higher, but simmering tensions between the United States and China kept investors on edge. The dollar eased against a basket of currencies. U.S. Treasury prices dipped.

Long-Term Damage

A record 40.767 million people filed claims since March 21.

“We think these filings in the 10 weeks since the mid-March coronavirus pandemic lockdown tells the true story of the wreckage out there in the country and the enormous long-term damage done to the economy,” said Chris Rupkey, chief economist at Mitsubishi UFJ Financial Group in New York.

The number of people still receiving unemployment benefits after an initial week of aid dropped 3.860 million to 21.052 million in the week ending May 16. The so-called continuing claims number is reported with a week lag.

Epoch Times Photo
Epoch Times Photo
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