Jobless claims and depressed economy show damage from virus

The number of laid-off workers who applied for unemployment benefits fell to 1.48 million last week, the 12th straight drop and a sign that layoffs are slowing but are still at a painfully high level.

Posted: Jun 25, 2020 9:35 AM

WASHINGTON (AP) — The number of laid-off workers seeking U.S. unemployment benefits dipped only slightly last week, and the economy shrank in the first three months of the year — evidence of the ongoing economic damage being inflicted by the viral pandemic.

The economy, which contracted 5% in the January-March quarter, is widely expected to shrink at a roughly 30% annual rate in the current April-June quarter. That would be the worst quarterly contraction, by far, since record-keeping began in 1948.

The government reported Thursday that the number of laid-off workers who applied for unemployment benefits declined slightly to 1.48 million last week. It was the 12th straight drop. Still, applications for jobless aid have declined just 5% in the past two weeks, a much slower rate of improvement than in April and May.

What's more, an additional 700,000 people applied for jobless benefits last week under a new program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.

The steady if slow decline in applications does suggest that the job market is gradually healing from the pandemic, which shuttered businesses and sent the unemployment rate up to 14.7% in April, its highest level since the Great Depression. The total number of people who are receiving jobless aid also fell last week, to 19.5 million from 20.3 million, evidence that employers are rehiring some of the workers who had been laid off since mid-March.

In addition, the government said Thursday that orders for durable goods surged nearly 16% in May, reflecting a rebound in some business activity. Still, the pace of orders and shipments remains far below pre-pandemic levels. And excluding the volatile transportation category, so-called core orders for durable goods rose only modestly last month, reflecting still-sluggish business investment.

The latest economic figures coincide with a sudden resurgence of COVID-19 cases in the United States, especially in the South and West, that’s threatening to derail a nascent economic rebound. On Wednesday, the nation set a record high of new coronavirus cases. Many states are establishing their own records for daily infections, including Arizona, California, Mississippi, Nevada, Texas and Oklahoma. Cases of coronavirus have also jumped in Florida and Georgia.

Should those trends continue, states may reimpose some limits on businesses that would likely trigger job cuts. Whether by choice or by government order, fewer consumers would shop, travel, eat out and visit bars or gyms. All those scenarios would result in renewed layoffs and hinder the economy.

Nervous investors sent stock prices plummeting Wednesday over escalating fears that the economy will suffer further damage from the disease.

“The health crisis continues to cast a dark shadow over the economic landscape,” said Bob Schwartz, a senior economist at Oxford Economics, a forecasting firm.

Before this week’s heightened worries about the pandemic, many economists had been relatively optimistic. In May, the unemployment rate unexpectedly declined, though to a still-high 13.3%. Consumers began spending again, sending retail sales jumping by a record amount. And sales of new homes rose as record-low mortgage rates fueled buyer interest.

In May, employers added 2.5 million jobs, a surprise gain. Still, that hiring represented just one-ninth of all the jobs that have been lost since the pandemic struck. And about 30 million Americans remain unemployed.

The economy shrank at a 5% annual rate in the first three months of the year, the government estimated Thursday. Yet economists envision a much sharper plunge in the April-June quarter -- a rate of up to 30%, which would be the worst since record-keeping began in 1948. Analysts expect the economy to rebound in the second half of this year before potentially regaining its pre-pandemic level in late 2021 at the earliest.

Yet all that assumes that the pandemic doesn’t intensify, force widespread business closures again and set the job market and the economy even further back. If it does, the damage could be dire.

For now, real time data on small businesses suggests that the economy’s improvement slowed in June compared with May and then stalled in the past week in some states that had reopened their economies the earliest.

Homebase, a company that provides scheduling and time-tracking software to small companies, says the proportion of small businesses that have reopened has leveled off. As of Monday, 78% of U.S. small businesses that it tracks were open, little changed from a week earlier. In Florida and Texas, the proportion of small businesses that have closed has actually risen as a result of the resurgent viral outbreaks.

Apple said late Wednesday that it would re-close seven of its stores in the Houston area, which is suffering a spike in cases. Last week, it had said would re-close 11 other stores in four states.

Economists at Goldman Sachs have upgraded their economic forecasts for the rest of this year and next year in light of the retail sales gains and other positive data. But they warned that a “significant” second wave of cases this fall that would force business closures could slash growth next year by more than half.

For the unemployed, the federal government has been providing $600 in weekly benefits, on top of whatever state jobless aid recipients are receiving. This federal money has pumped nearly $20 billion a week into the economy and enabled many of the unemployed to stay afloat.

A majority of recipients are even earning more than they did at their old jobs, raising concerns that this could discourage some of them from returning to work. But the $600 a week in aid will expire after July, and Trump administration officials have said they oppose an extension. Republicans and Democrats in Congress have introduced compromise measures.

The $600 a week has been a major help to Alexis O’Neill, who was laid off in March from an accounting job at an aviation fuel company. O’Neill, 49, who lives with her mother in Ann Arbor, Michigan, is looking for a job that would allow her to work from home so she could avoid putting her mother at risk of contracting the virus.

She has applied for at least a dozen jobs but has received no responses except an acknowledgement of her application. Many open jobs now seem to offer lower pay than before the pandemic struck. Compounding the dilemma for O’Neill, Michigan is stuck with the nation’s second-highest state unemployment rate, 21.2%.

“The job market is terrible,” she said. “Everything either pays so badly or doesn’t come with benefits.”

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 489116

Reported Deaths: 6614
CountyCasesDeaths
Hennepin1014901592
Ramsey43327810
Dakota36619394
Anoka33496391
Washington22208262
Stearns18822202
St. Louis14887265
Scott13403107
Wright12609116
Olmsted1185990
Sherburne878574
Carver787641
Clay695588
Rice677691
Blue Earth601035
Kandiyohi581274
Crow Wing523582
Chisago501745
Otter Tail486071
Benton450990
Winona419749
Mower410831
Douglas394568
Goodhue389069
Nobles387247
Polk345063
McLeod341250
Beltrami338951
Morrison327747
Becker314842
Itasca314646
Lyon313845
Isanti309456
Steele303611
Carlton300449
Freeborn286424
Pine283216
Nicollet262441
Todd249730
Brown248237
Le Sueur238120
Mille Lacs229447
Cass221224
Waseca210417
Meeker208134
Martin190829
Wabasha18733
Roseau181017
Hubbard161041
Houston158214
Dodge15404
Renville152640
Redwood147127
Fillmore13969
Pennington138716
Chippewa136935
Cottonwood136020
Wadena131420
Faribault124917
Aitkin119133
Sibley118310
Watonwan11828
Rock116314
Kanabec108820
Pipestone101824
Yellow Medicine97717
Murray9548
Jackson94610
Swift87818
Pope8165
Marshall78615
Stevens7478
Lake74218
Clearwater72014
Lac qui Parle68716
Wilkin67711
Koochiching62111
Big Stone5173
Lincoln5122
Grant4928
Norman4798
Unassigned44768
Mahnomen4437
Kittson41021
Red Lake3615
Traverse3115
Lake of the Woods2221
Cook1190

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 337676

Reported Deaths: 5494
CountyCasesDeaths
Polk52087560
Linn19512317
Scott17167212
Black Hawk14970293
Woodbury13847214
Johnson1317075
Dubuque12450196
Dallas1022593
Pottawattamie9897146
Story965045
Warren514976
Clinton502684
Cerro Gordo501383
Webster495788
Sioux480369
Marshall465273
Des Moines428461
Muscatine426393
Buena Vista413237
Wapello4059110
Jasper387767
Plymouth368978
Lee354653
Marion341571
Jones285155
Henry279837
Bremer270555
Carroll266948
Crawford253635
Boone244330
Benton241154
Washington239547
Mahaska215746
Jackson210339
Dickinson204240
Tama203065
Kossuth198655
Delaware186240
Clay184425
Winneshiek183628
Fayette179335
Page178119
Buchanan177829
Wright174531
Hamilton173942
Cedar172723
Hardin170239
Harrison167670
Clayton160254
Butler159331
Mills148520
Floyd148141
Poweshiek148030
Cherokee146236
Lyon145741
Allamakee144848
Madison143218
Iowa140723
Hancock138030
Grundy132430
Winnebago130531
Calhoun129611
Cass129651
Jefferson128634
Appanoose123247
Louisa122644
Mitchell120740
Chickasaw119915
Union119331
Sac118818
Shelby117634
Emmet115340
Humboldt113725
Franklin109719
Guthrie109628
Palo Alto101721
Howard99722
Unassigned9720
Montgomery96936
Clarke95120
Keokuk92429
Monroe90028
Ida81832
Adair81630
Pocahontas80919
Davis76623
Monona76527
Greene73110
Lucas72221
Osceola68315
Worth6678
Taylor64112
Decatur5719
Fremont5619
Van Buren53718
Ringgold50620
Audubon4759
Wayne47221
Adams3194
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