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The rapid rise in unemployment claims represents a new economic pain

Ten months after the coronavirus has devastated the labor market, the resurgent epidemic continues to send shock waves through the American economy.

Even though more than half of the 22 million jobs lost last spring have been restored. But the new infections have led to shutdowns and layoffs that hit the rest and hospitality industries, particularly causing recovery setbacks.

The latest evidence came on Thursday as the Labor Department reported a sharp rise in state unemployment benefits claims last week, surpassing one million for the first time since July.

Just days earlier, the government announced that employers laid off 140,000 jobs in December, the first ever net decline since last spring, with restaurants, bars and hotels suffering substantial losses.

“We are in an economic loophole and we are digging in the wrong direction,” said Daniel Zhao, senior economist at Glassdoor. “The report clearly shows that the claim increase is worse than expected and that the demand increases. There is reason to think things get worse before they get better. ”

That expectation is even more troubling as a key component of the relief suit signed by President Trump last month – the $ 300 weekly federal grant to other unemployment benefits is depleted. In the middle of March

President Joseph R. Biden Jr., the elected president, said he would push the new stimulus through Congress as a lifeline for workers and employers until the epidemic could be controlled. His plan will include direct payments for most households along with assistance for small businesses and local and state governments.

The historical economic data has made a sense of urgency in such efforts, with millions struggling to reach the end despite growing unemployment.

The Labor Department said on Thursday 1.15 million workers filed a preliminary petition for state unemployment benefits during the first week of the new year. Another 284,000 claims have been filed for the plague unemployment assistance, a federal emergency program for freelancers, part-time workers and others who are normally ineligible for unemployment benefits. Both images are not seasonally modified. According to the seasonally adjusted criteria, the new state claims totaled 965,000.

Prior to an outbreak, weekly filings were estimated to be approximately 200,000.

The holiday could hold unemployment claims earlier this week, with people waiting until the new year to submit the claim. But many economists voiced skepticism that filing delays were a key driver of last week’s claims.

“I don’t think there is a question that something wrong with margins might be going on,” said Mark Hamrick, senior economic analyst at Bankrate.com, “but we have to think that these are not the unemployed lines of my grandfather. We, which means most of them do it digitally. I think if anyone is just trying to understand human nature, it doesn’t make sense for someone to delay seeking financial assistance when they leave their job. ”

More likely, economists say the $ 300 federal dietary supplement spurred the need for increased benefits.

Confusion over the new federal aid, which Trump has spent days threatening to not sign, could temporarily slow the epidemic’s unemployment aid claims, which fell over the past week. Ended Jan. 2.An increase last week led to an increase in numbers. Corresponds to the previous higher level

Despite receiving new federal aid for the unemployed in last month’s legislation. But there are still concerns about payment processing, the work left to states after the first round of emergency benefits crashes last spring.

“The state is now very careful to take as much advice as possible,” said Michelle Evermore, senior policy analyst at the National Employment Law Program, a non-profit labor rights group. But, she said, some states, including New York, appear to be better equipped to advance this fast, using the “Ask a question later”

She said she expects that within the next week most states will have. The “essential parts” of their program are available if not all components.

In addition to the $ 300 weekly supplement and short-term benefit renewals for gig workers and self-employed workers, the latest federal aid cycle has renewed the plague emergency unemployment compensation, a program for those who benefit. State’s depleted

The varying nature of state unemployment programs, some of which offer only 12 weeks of benefits at regular intervals, have made them the target of Democrats. Biden pledged to provide Americans with unemployment insurance “on time and in full” and said Oregon Senator Ron Wyden, Democrat and chairman of the incoming Senate Finance Committee. He will pressure to include an overhaul. The country’s unemployment welfare system

Among some of the Democratic-funded provisions are the automatic renewal of federal unemployment benefits and other assistance until the unemployment rate drops to a certain level. That would alleviate the need for repeated congressional action in a crisis.

At the same time, as the coronavirus advances the service sector, employers are likely to cut more jobs in the coming weeks. Some struggling businesses will not survive.

“When I look at the epidemic and the health situation, people are still as scared of the virus as they should, and that will have an economic impact,” said Ann Elizabeth Konkel, an economist at Career Site. “Viruses are the root of what is happening now.”

Still, economists and analysts see a better time in the future, possibly spring. As more and more people are vaccinated, the patient will begin to decline, which will reduce the limitation in the business and possibly lead to the recovery of consumer activity. Warmer climates could cause more people to gather outside and slow the spread of the virus, just like last year. New stimulus measures could ease the economic pain of the pandemic.

Even with the coronavirus quarantine But economists say the upswing will not happen overnight.

“As we enter the second quarter, the economy should start to recover,” said Bankrate’s Hamrick, “but apparently all of this is taking longer than anyone expected and it may take time to heal as well.”

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