First-time jobless claims for the final week of August fell to 881,000, beating analyst expectations and marking the lowest weekly total since the pandemic began.
Part of the reason for the dip is that the government changed the way it accounts for seasonal fluctuation in the labor market. The adjustment is supposed to yield more accurate data in the long run, but it also diminishes the significance of the weekly drop in the numbers released by the Labor Department.
Although President Donald Trump has boasted on Twitter of soaring job gains in the past three months, economists say that ignores the inescapable fact that the economy is still nearly 13 million jobs shy of where it was in February — and the mom-and-pop businesses that are America's primary engine of job growth are losing ground.
"The fact remains that these are extremely elevated numbers and that we have to brace for further job loss in the coming weeks and months," said Mark Hamrick, senior economic analyst at Bankrate.com.
"Small businesses represent 65 percent of all new jobs created," said Eric Groves, co-founder and CEO of the business-to-business technology firm Alignable, which uncovered a new — and alarming — trend in small-business sentiment: Owners anticipate more layoffs.
Alignable surveyed more than 4,000 business owners and found that they had regained an average of a little over 80 percent of their pre-pandemic head count by August but that they expected that to drop to 70 percent within the next 30 days.
"For the first time since July, when we started covering the recovery, we saw their outlook decline. We've seen it flat before, but I've never seen it come down," Groves said.
Tina Lyons, owner of a commodities freight transportation company in Portland, Oregon, said: "I would be really scared to bring anybody back. I'll just put my head down and take it for a while — I'll just do the work myself. Things are so uncertain."
After business plummeted by 80 percent in March and April, Lyons had to lay off one of her four employees in June. Although she said demand now has stabilized enough that she can cover payroll costs for the time being, she said her business is merely "limping along" — a victim first of trade disputes, then the pandemic. "Last year was so bad because of the tariffs. We kind of have a double hit in our industry," she said.
Government data released Wednesday quantifying the July labor market in nearly 400 metro areas was equally sobering: El Centro, California, had the highest unemployment rate in the country, at 26.8 percent. Yuma, Arizona, and Atlantic City, New Jersey, were not far behind, with jobless rates of about 25 percent and 24 percent, respectively.
"You think about something touching nearly 27 percent, that's Depression-era," Hamrick said.
In total, 116 metro areas have higher unemployment rates than the national average of 10.2 percent. Greater Los Angeles has a nearly 17 percent unemployment rate, and the New York City metro area is not far behind, at just over 16 percent.
"They're now running on fumes," Hamrick said.
As many economists predicted, the exhaustion of funds from the government's Paycheck Protection Program is rapidly bringing Main Street to an inflection point. A recent survey by the National Federation of Independent Business, the small-business trade group, found that 84 percent of loan recipients said they have none of that money left, an increase of 13 percentage points in a single month. More than 1 in 5 estimated that, without an economic turnaround or another government lifeline, they will have to close their doors within six months.
"My sales have been consistently down 40 percent since April," said Deborah Field, owner of a specialty print and design store in Phoenix.
Field received a paycheck protection loan that allowed her to rehire the two employees she had had to lay off in May, but with little demand for everything from business cards to wedding invitations, she had no choice but to let the workers go again once the funds were spent.
"Sales have not come back," she said. "We still need help."
Weak August private-sector jobs data from the payroll processor ADP further underscored the worrying trend of small-business weakness. The month's job gains of 428,000 — less than half the 1 million expected by analysts — were heavily concentrated at the largest companies. Businesses with 1,000 or more employees comprised 270,000 of the new jobs. Businesses with fewer than 20 employees added just 43,000.
"In many ways, small business faces the highest degree of risk as this downturn persists," Hamrick said.
"Smaller companies tend to manage with less cash on hand," he said, and many simply have no wiggle room left. "There's no path to success for those companies right now if they're not able to recapture their customers."
Canden Arciniega, who owns a Washington, D.C.-based tour company that lost nearly all of its bookings in the early days of the pandemic, said, "We had seven employees in March and laid everyone off in April."
The depth and the duration of the travel bans and business closures have prevented Arciniega, Like many other business owners, from being able to bounce back.
"We were able to get a PPP loan, but that only lasted eight weeks, and we've since had to lay everyone off again," she said, adding that business is still barely a trickle compared to before the pandemic and that she worries about what the future holds.
"We're struggling as a company, our guides are struggling, and I'm struggling," she said. "I check the news daily waiting for Congress to return and help us. ... I'm drowning and naively waiting for the government to help — with anything."