Unemployment Claims Drop, But Are Still Higher Than Any Recession Since 1967

Matty-Sways

Last week's U.S. unemployment claims remained elevated above pre-pandemic highs (695,000) at 840,000.

Unemployment claims fell to 840,000 last week, Thursday’s Labor Department report said. (Hovered between 800,000 and 900,000 for over a month.) This number doesn't include announced job cuts from American Airlines Group Inc., United Airlines Holdings Inc. and Walt Disney Co. and California pausing the processing of new claims for two weeks.

The number of people collecting unemployment benefits fell to 11 million in the week ended Sept. 26 from 12 million the prior week. Numbers suggest many unemployed people are returning to work as the country starts to open up. (Part of the drop is because individuals have exhausted the maximum duration of payments available through regular state programs). There is a federal program that provides an extra 13 weeks of benefits. (2 Million receiving aid through that program in the week ended Sept. 19, up from 1.8 million a week earlier).

Millions of workers are also collecting benefits through a federal pandemic program for the self-employed, gig workers and others not typically eligible for unemployment aid. In the week ended Sept. 19, there were 11.4 million individuals seeking benefits through this program.

“It’s more of the same, but it’s also still jaw-dropping that we have that many new claims even now as we’re six, seven months into this whole recession and recovery,” said Eliza Forsythe, an economics professor at the University of Illinois, Urbana-Champaign.

Monthly job gains and job postings have slowed, and more layoffs are becoming permanent. Household income fell at the end of summer too, and consumer spending is slightly up, but seems to have stagnated.

Mr. Trump earlier in the week halted negotiations with Democrats on a large coronavirus relief package until after the election, then backtracked and said lawmakers should pass a series of bills, including airline assistance, funds for direct checks and a small-business aid program, rather than 2.2 Trillion package the Democrats are pushing.

Many economists are skeptical about the accuracy of the pandemic claims figures, though. The pandemic unemployment program has been subject to fraud, as it is more difficult for state labor departments to verify incomes of self-employed people and gig workers than regular employees, Ms. Forsythe at the University of Illinois, Urbana-Champaign noted.

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