U.S. jobless claims continue to fall amid reeling labor market

Sep 18, 2020

U.S. jobless claims continue to fall amid reeling labor market

Washington DC (USA), September 18: The number of initial jobless claims in the United States declined to 860,000 last week, indicating a continued recovery in the labor market ravaged by the COVID-19 crisis, the Labor Department reported Thursday.
In the week ending Sept. 12, the number of Americans filing for unemployment benefits decreased by 33,000 from the previous week's upwardly revised level of 893,000, marking the fourth time in the past 26 weeks that the number has come below 1 million.
"Initial jobless claims fell last week for both regular and pandemic programs, hinting at some improvement in labor conditions," Sarah House and Tim Quinlan, senior economists at Wells Fargo Securities, wrote in an analysis. "Continuing claims, however, remain stubbornly high."
The number of people continuing to collect state unemployment benefits decreased by 916,000 to 12.6 million in the week ending Sept. 5, the report showed.
The total number of people claiming benefits in all programs -- state and federal combined -- for the week ending Aug. 29, however, increased 98,456 to 29.8 million, signaling a continued significant disruption in the labor market.
House and Quinlan also noted that the decline in continuing claims for regular state programs came after six months of COVID-19 shutdowns, and "recipients are starting to exhaust benefits."
State governments are facing extreme budget distress, and the extra 600-U.S.-dollar weekly unemployment benefits from the federal government expired at the end of July, but lawmakers remain deadlocked over the next round of COVID-19 relief bill.
House Democrats unveiled a 3-trillion-dollar relief proposal in May, which didn't gain support from Republicans. Senate Republicans unveiled a 1-trillion-dollar package in late July, but failed to advance a slimmed-down proposal last week. Democratic leaders said recently they won't accept any package lower than 2.2 trillion dollars.
U.S. employers added 1.4 million jobs in August, and the unemployment rate dropped to 8.4 percent, according to earlier data from the Bureau of Labor Statistics. Roughly half of the 22 million jobs that were lost in March and April are yet to be recovered.
Federal Reserve Chairman Jerome Powell said at a virtual news conference Wednesday afternoon that the level of unemployment is probably 3 percent higher than the official data, considering those people who are misidentified as employed and the declined labor force participation.
The median projection for the unemployment rate is 7.6 percent at the end of this year, and 4 percent by the end of 2023, according to the Fed's latest economic projections. It's still above the historically low of 3.5 percent the country experienced before the pandemic.
The Fed on Wednesday kept its benchmark interest rate unchanged at the record-low level of near zero and signaled to maintain this target range until at least 2023, noting that the path of the economy will depend significantly on the course of the coronavirus.
More congressional aid, better use of masks, testing and tracing are all needed to ensure a better recovery, Diane Swonk, chief economist at Grant Thornton, a major accounting firm, said in a blog.
"The fear is that the recovery will hit a wall in the fourth and first quarters, absent such measures," Swonk said.
Source: Xinhua News Agency