The number of Americans filing new claims for unemployment benefits came in at around 1 million last week, suggesting ongoing labor market weakness amid the economys fitful recovery from the depths of the COVID-19 recession.
Initial claims for state unemployment benefits came in at a seasonally adjusted 1.006 million for the week ended Aug. 22, compared to 1.104 million in the prior week, the Labor Department said in a release on Thursday (pdf).
Jobless claims fell below 1 million 3 weeks ago for the first time in months, raising expectations for the labor market to continue its hopeful rebound trajectory. But with weekly claims now seeming to plateau at around a million, concern is growing that the much-hyped V-shaped recovery may flatten or give way to another recessionary dip.
“We are clearly in the second phase of the recovery, driven by underlying fundamentals rather than purely the surge in activity as household reengaged,” said James Knightley, chief international economist at ING in New York. “This reinforces our view that a V-shaped recovery will not happen, the U.S. economy is unlikely to recover all of its lost output until mid-2022.”
Americas record-long economic expansion that saw unemployment fall to 3.5 percent was cut short by the CCP (Chinese Communist Party) virus outbreak. Lockdowns and business shutdowns decimated the labor market, with 20.5 million jobs lost and the unemployment rate surging to 14.7 percent in April, both post-World War II records.
“It was awful. Health and economic impacts were tragic. Hardship and heartbreak were everywhere,” White House economic adviser Larry Kudlow said of the CCP virus recession in remarks at the Republican National Convention, during which he noted that the Trump administration plans to introduce another round of tax cuts in a bid to spur growth, create jobs, and bring the economy back online.
Director of the National Economic Council Larry Kudlow speaks to reporters inside the Brady Press Briefing room at the White House in Washington on Feb. 13, 2020. (Tom Brenner/Reuters)A separate report from the Commerce Department on Thursday confirmed the economy suffered its deepest contraction in at least 73 years in the second quarter. Gross domestic product plunged at a 31.7 percent annualized rate last quarter, the government said in its second estimate. While a slight upward revision from the agencys July estimate of minus 32.9 percent, the number confirms the historic depth of the pandemic plunge.
The Labor Departments Thursday release also showed that continuing jobless claims, which reflect people who continue to collect unemployment benefits after making an initial filing, dropped by 223,000 for the week ended Aug. 15, to around 14.5 million. The total number of people claiming benefits in all programs for the week ending Aug. 8 was just over 27 million, a drop of over 1 million from the previous week.
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