The data is being watched closely with the presidential election less than two weeks away. Economists say they have been concerned by the continued high level of new unemployment claims so far into the pandemic, saying that these layoffs are more likely to be permanent than those that occurred early in the crisis.
The length and severity of the crisis can be measured in the growing number of people who have been on unemployment insurance for more than 26 weeks.
“The ranks of people applying for extended unemployment are starting to make it look like a traditional recession," said Diane Swonk, chief economist at Grant Thornton. “This leaves scars in the labor force, is demoralizing and increases health risks for workers. … We’re not calling people back fast enough at a time that we know many households are running on fumes, unable to pay for food for the week and rent.”
Benefits for the unemployed have fallen sharply since the $600 benefit expired at the end of July. About 32 percent of Americans reported difficultly paying for basic expenses according to a recent Census Bureau survey.
And the new rise in coronavirus cases remains another threat to the recovery.
The weekly number of new initial claims, considered a bellwether for the health of the labor market, has remained above the pre-pandemic record of 695,000 for more than 30 weeks.
The unemployment rate has dropped from its peak in April but remains at nearly 8 percent. Due to the date of the election, that monthly data, released the first Friday of every month, will not be released for the month of October until after the contest.
Still there have been a few encouraging signs. Retail sales grew 1.6 percent in September, powered in part by purchases of cars, outdoor gear and exercise equipment. The third-quarter gross domestic product is supposed to show significant growth when the statistics are released next week.
But it’s not enough to get us out of what remains a very deep hole, Swonk said.
“It bolsters the case for stimulus and aid, now," she said. "I feel like a broken record.”
House Democrats, Senate Republicans and the White House continue to wrangle over a package of financial stimulus that would boost weekly unemployment checks once again.