There have been hopes that the reopening of businesses that had forcibly shuttered would see these numbers drop precipitously, helping to speed the economy’s recovery at a comparable rate to its fall. But this “V-shaped” recovery does not appear to be materializing as job losses remain severe three months into the pandemic.
Another 760,000 people filed initial claims for Pandemic Unemployment Assistance, a supplemental program created by Congress for self-employed and gig workers. And the total number of people receiving benefits went down slightly, to 20.5 million. More than 45 million people have filed for unemployment at some point during the pandemic.
Analysts said the weekly numbers point to steep challenges the country faces in its recovery.
“The fact that we’re not seeing a huge decline in continuing claims as the economy starts to reopen suggests that firms in directly affected industries are only partially recalling some employees,” said Nick Bunker, an economist at Indeed Hiring Lab. “And that’s not going to lead to a huge snapback.”
“We all looked for confirmation of hopes that these claims would continue to decline,” said Mark Hamrick, a senior economic analyst at Bankrate. “But we see the decline was just [over] 50,000. That’s less of an improvement we’ve seen in recent weeks.”
The economic outlook is complicated by continuing coronavirus outbreaks across the country: Twenty-one states are seeing an increase in their daily average of new coronavirus cases this week compared to last week, according to data compiled by The Washington Post. New infections nationwide also surged.
The number of people heading back to work or gaining new jobs has only nominally kept pace with those still filing for unemployment for the first time, raising questions about whether the recovery is stalling.
The weekly unemployment insurance data remains an imperfect measurement. It does not capture which industries shed jobs or why, nor does it necessarily reflect the exact time period a person filed for unemployment — instead revealing the time a state first processed the claim. So there are unanswered questions about whether some of the backlogs that plagued state unemployment agencies early in the crisis are still being worked through.
Attempts to battle wide-scale fraud have slowed application processing in states including Maine, Michigan, Pennsylvania and Washington. In Kentucky, hundreds of people lined up outside of the state capitol Wednesday, waiting an estimated eight hours, seeking help with stalled claims.
President Trump and his economic team have expressed hope of a swift recovery. The most optimistic forecasters have suggested that as the economy reopened, businesses that had forcibly shuttered would be able to bring back their workers. But Bunker said the numbers seemed to indicate that the pace of rehiring was slowing, even as the country opens up.
“In the May jobs report we saw an increase in employment and a drop in unemployment rate due to an increase in businesses that got hit really hard initially,” he said. “What we may be seeing now is that pace of rehirings is slowed or that the recovery could be stalling out, but it’s not 100 percent clear from the data.”
There have been other positive indications: Retail sales spiked 17.7 percent in May, although they continue to be down nearly 8 percent since February.
But analysts and key economic leaders such as Federal Reserve Chair Jerome H. Powell continue to warn that despite bright signs, the economic pain could be deep and long-lasting for many sectors of the economy.
Since February, nearly 20 million jobs have been lost, and the unemployment rate has risen about 10 percentage points, Powell told a Senate committee this week. He said the decline in a key measure of economic growth, gross domestic product, is likely to be the most severe on record.
There are other problems on the horizon. The $600 weekly supplement for unemployed workers will end by August. Unemployment benefits could also begin to expire for workers after the summer in some states with shorter durations allowed on unemployment insurance.