Weekly initial jobless claims fell slightly to just over 1 million, down from 1.1 million, according to data from the Department of Labor, as companies continue to lay off workers even as parts of the economy show signs of rebound.
Recovery remains well out of reach and dependent on the health situation and policy response and the trend line remains volatile. Just two weeks ago initial claims had fallen to under 1 million, before jumping up again.
The current jobless claim level of 1,006,000 is markedly below spring’s peak of nearly 7 million, but still historically high. Before the coronavirus pandemic, the average number of claims was around 200,000 a week.
The jobless claims report hits on the final day of the Republican National Convention where President Donald Trump misleadingly claimed, “We just broke a record on jobs, an all-time record. There’s never been three months where we’ve put more people to work, over nine million people.”
But the outlook changes if you expand the narrow window of time Trump used out to the full picture. That return to work only comes after a loss of nearly 13 million jobs, the most in American history.
Overall, the economy has lost almost 6 million jobs since Trump took office, compared to an over 11 million increase in jobs during the same period in President Barack Obama’s last term.
“The economy is clawing itself out of the dark hole it has fallen into, but it still has a long way to go,” said Mark Zandi, chief economist at Moody’s Analytics.
The new data on initial jobless claims also comes as over 30 states have been approved by FEMA to give an additional $300 per week in federal employee benefits authorized by President Donald Trump. This could motivate additional workers who were laid off to file jobless claims, but only a handful of states actually have begun distributing the funds so far. Many states remain confused about the process and the need to reprogram what are often antiquated computer systems.
Businesses more vulnerable to coronavirus impacts, such as travel, continue to announce layoffs while even healthier businesses trim costs to adjust for an expected downturn and take advantage of the moment to restructure.
This week the airline industry announced massive potential cuts if they’re not able to wring out more cost-cutting concessions from unions or receive additional federal aid. Legacy airlines American announced 19,000 potential layoffs and Delta about 1,900. Bed Bath and Beyond said it would lay off 2,800. Salfesforce.com, a day after announcing banner profits and seeing a stock surge, said it would lay off 1,000 out of its 54,000 member global workforce. Affected employees would be given opportunities to apply for new roles in other parts of the company, the home goods retailer said.
The pandemic-induced recession is occurring tectonic shifts in the U.S. business market and is in many ways accelerating existing trends and exposing underlying weaknesses.
“When you have restructuring spread out over several years crunched into several months it leaves workers no place to go. Normally as one industry changing another is emerging,” said Martha Gimbel, a labor economist at Schmidt Futures.
While in the spring there were predictions that the economic damage would be intense but brief, there are indications that, absent an effective virus response, the recovery is plateauing well-below pre-pandemic levels.
The percent of unemployed workers on temporary layoff has fallen, but those unemployed listed as not on temporary layoff has risen, a sign some of those temporary layoffs are becoming permanent.
“If we don't figure out what to do with people moving toward long-term unemployment, it’s going to be a disaster,” said Gimbel.”