The number of new unemployment claims rose for the first time in months last week, to 1.4 million — a troubling sign for the labor market that’s weathering a new round of closures as the pandemic spreads.
“What you’re seeing is that, as the economy slows, the pace of claims picks back up — which really puts at risk the monthly jobs report over the next few months,” said Joseph Brusuelas, the chief economist at RSM. “The July numbers are going to be tenuous, but it’s August that I’m worried about.”
The number of workers continually claiming unemployment insurance went down, however, a statistic that lags by a week, to 16.1 million workers for the week ending July 11, from 17.4 million for the week ending July 4.
In addition to the 1.4 million seeking unemployment nationwide last week, another 980,000 new Pandemic Unemployment Assistance claims were filed, the benefits offered to self-employed and gig workers.
The numbers come as millions of unemployed workers are about to exhaust stimulus payments from two federal benefits programs whose expiration economists have warned could have dire effects on the economy.
Brusuelas said the numbers are a sign that the burst of economic activity that marked the country’s reopening has waned, and that shrinking consumer demand remained a significant risk for businesses and the workers they employ across the country.
“We are going to see a much slower pace of growth the reset of the year,” he said. “While we still are retaining our call for a swoosh-shaped recovery, one has to acknowledge a w-shaped recovery is possible.”
The extra $600 a week in unemployment benefits that the federal government has offered to supplement more modest state unemployment benefits will end this week, as lawmakers wrangle over legislation that could extend it.
Including the new benefits available to gig workers and the self-employed, more than 53 million applications have been filed for some form of unemployment insurance during the pandemic.