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Tuesday, December 7, 2021

Unemployment Claims Reach 787,000, Signals Slow But Steady Economic Recovery

Unemployment claims nationwide reached 787,000 for the week ending Oct. 17, signaling a slow but steady economic recovery as the fallout from the Covid-19 pandemic continues into the fall.

According to the Department of Labor, unemployment claims reach 787,000 as of October 17, 2020.

New applications for unemployment benefits were down 55,000 from the previous week, according to a Thursday report from the U.S. Department of Labor, which had seen claims spike to their highest level since late August: 898,000. Although unemployment had been decreasing, the pandemic continues to affect the U.S. economy, with the entertainment and hospitality industries especially hard hit.

Each state has criteria for receiving unemployment benefits, but most states contribute 26 weeks of benefits that pay half the wages earned at one’s previous job. In late March, an additional 13 weeks of federal benefits were added in the Coronavirus Aid, Relief, and Economic Security Act stimulus bill.

Only 3 months ago,  a hiring sign is displayed in a business window along a shopping street in lower Manhattan in New York City. According to the latest jobs report from the Bureau of Labor Statistics, employment numbers have increased.  (Photo by Spencer Platt/Getty Images)

The bill also extended unemployment relief to self-employed people and independent contractors, both of whom are usually unable to claim unemployment benefits. An additional $600 per week was made available to all who qualified for regular unemployment benefits.

The brunt of unemployment is being faced by former employees of hard-hit sectors such as food services, entertainment and recreation. More than half those sectors are made up of small businesses and may take years to return to pre-pandemic GDP levels, as predicted by the McKinsey Global Institute.

Approximately 60% of all business closures since the pandemic began are now permanent, according to the Yelp Local Economic Impact Report.

As restaurants and venues limit their seating capacities and enforce social distancing mandates, the demand for cooks, servers, and bartenders has decreased dramatically. The unemployment rate for workers in the accommodation and food service industry stood at 18% in September, according to the Bureau of Labor Statistics, compared with the 7.9% national unemployment rate.

“The national unemployment rate of 7.9% suggests that this is a mild recession, with a huge transitory shift,” said Christopher Thornberg, founder of Beacon Economics, to Zenger News.

“About a third of that 7.9% are people who are still on temporary layoff, waiting to get back to work. Compared to the Great Recession, only one tenth of those unemployed were on temporary layoff,” said Thornberg.

“The last stages of recovery will be a bit slower, but the economy is bouncing back. The ability to go the rest of the way is going to depend on getting control of the virus. We haven’t done that yet.”

As the pandemic reaches its sixth month following the nationwide lockdown, many households are running out of funds from their previous unemployment claims. For those who filed for unemployment in April, when the rate reached its peak of 14.7%, the 26 weeks of state-funded benefits are nearly up.

Unemployment claims reach 787,000 according to Dept. of Labor recent report. (Photo Paula Bronstein/Getty Images)

As is precedented in times of national crisis, such as during the 2009-13 recession, the responsibility of additional unemployment benefits has switched from state governments to the federal government.

President Trump has voiced support for a $1.8 trillion stimulus plan for further unemployment aid. Democrats in Congress, including Speaker Pelosi, view Trump’s plan as insufficient, while House Republicans see the plan as too expensive. Ongoing disagreements over the bill have led to a bureaucratic standstill, as millions of Americans hope to see another stimulus package before the holiday season.

Senate Majority Leader Mitch McConnell warned the White House on Oct. 20 against striking a stimulus deal with Pelosi before the Nov. 3 election due to possible political repercussions. Trump has maintained his stance toward pushing the stimulus before the election, telling Congress to “go big or go home.” The size and scope of the bill remain undetermined as bipartisan support in Congress continues to fall short.

(Edited by Ron Panarotti, Jason Reed and Allison Elyse Gualtieri)



The post Unemployment Claims Reach 787,000, Signals Slow But Steady Economic Recovery appeared first on Zenger News.

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