Portland, Oregon 2020-11-19 15:01:45 –
Washington (AP) — The number of Americans seeking unemployment assistance increased to 742,000 last week. This is the first increase in five weeks and is a sign that the outbreak of the resurrected virus will slow the economy and force more companies to cut jobs.
The worsening pandemic and the arrival of the cold could accelerate furloughs in the coming weeks. Of the approximately 20 million Americans currently receiving some form of unemployment allowance, about half lose their allowance when two federal programs expire at the end of the year.
Rubyla Faruki, chief US economist at forecasting firm High Frequency Economics, said: “Also, the expiration of federal benefits later this year will put a new burden on household income. Overall, the labor market is still under stress.”
A report from the Ministry of Labor on Thursday showed that applications for unemployment assistance increased from 711,000 last week. In March, when the pandemic first intensified, the number surged to 6.9 million. Prior to that, applications typically hovered about 225,000 times a week.
Concerns over the confirmed surge in virus infections and their impact on the economy are putting pressure on financial markets. The Dow Jones Industrial Average fell on the third day in early Thursday trading.
The gradual recovery of the economy is increasingly at stake, with newly identified daily infectious diseases in the United States exploding by 80% in the last two weeks, reaching record highs. More states and cities are issuing mask obligations, limiting the size of meetings, restricting food in restaurants, closing gyms, and reducing the time and capacity of bars, stores and other businesses. At least 15 states are tightening corporate regulations to delay infection.
Evidence is emerging that consumers have lost confidence in their economic outlook and are retreating shopping, eating out and other activities. Spending on 30 million credit and debit cards tracked by JPMorgan Chase fell 7.4% earlier this month compared to a year ago. It showed a sharp drop from two weeks ago. According to a University of Michigan survey, consumer sentiment also declined in early November, down nearly 21% from a year ago.
In addition, retail sales in October increased by only 0.3%. This is the smallest increase since the store reopened in April after the national closure in March. Weak profits suggest that consumers have begun to cut spending, even before many new restrictions have been imposed on businesses.
The government said Thursday that the number of people continuing to receive traditional unemployment benefits has dropped from 6.8 million to 6.4 million. Some of that decline reflects more employment. However, it also shows that many unemployed have run out of state unemployment assistance (usually expires after six months) and have moved to a federal extended benefit program that lasts another 13 weeks.
However, according to a Wednesday report from the Century Foundation, the extended benefit program is one of two federal aids set to expire at the end of the year, eliminating the benefits of 9.1 million people. Congress has so far not agreed on new stimulus measures for unemployed individuals and struggling businesses. Aid cutoffs will significantly reduce unemployed income, further reduce their spending and perhaps undermine the economy.
One of those programs is pandemic unemployment assistance. This made self-employed and contract workers eligible for unemployment assistance for the first time. PUA was founded by a trillion-dollar aid package enacted by Congress in the spring.
The second measure of stimulus provided an additional 13 weeks of benefits to the unemployed who ran out of state benefits.
If these two programs expire on December 26, the Century Foundation estimates that 12 million people will lose profits. Approximately 2.9 million people will probably move to a state extended benefit program that lasts 6 to 20 weeks, according to the report. The rest lose about $ 320 a week on average nationwide.
Expiration of benefits makes it difficult for the unemployed to pay rent, buy food, and pay for utilities. Most economists agree that such assistance is effective in boosting the economy, as unemployed people tend to spend their profits quickly.
Cutting off profits with so many people still receiving them would be unusually fast compared to the previous recession. During the Great Depression of 2008-2009, the government extended the unemployment allowance to 99 weeks and additional assistance continued until 2013. At the end of the program, about 1.3 million people lost their allowances. This is the end of this year.
Elizabeth Pancotti, co-author of the Century Foundation Report and policy adviser to Employ America, a left-wing think tank, said: “We’re heading into winter, we’re seeing additional business closures, consumer demand is already declining … Cutting off profits seems inhumane to me I will. “
In March and April, when the US pandemic broke out, tens of millions of people applied for unemployment assistance. Many of them were rehired or got new jobs, but those who couldn’t find a job began to run out of six months of state aid as early as September.
Most of them then move on to a pandemic emergency unemployment compensation program that offers an additional 13 weeks. Still, the Century Foundation estimates that 3.5 million people ran out of all this 13 weeks before the end of the year. By then, an additional 950,000 people will run out of 39 weeks provided by the PUA program.
US jobless claims rise to 742,000 Source link US jobless claims rise to 742,000