Layoffs Mount and Jobless Claims Keep Coming

Layoffs Mount and Jobless Claims Keep Coming

Andrew Kelly

About 837,000 people filed for state unemployment benefits last week, the Labor Department announced Thursday, and another 650,000 people applied for aid through the federal Pandemic Unemployment Assistance program for self-employed and gig workers. Combined, the weekly claims numbers come to more than 1.4 million.

The total number of people receiving state and federal unemployment benefits rose slightly to 26.5 million.

The state claims number was lower than the week before and better than expected, although economists warned that the data from California likely skewed the results as the state adjusted its processing and reporting system, while claims rose in the federal system. More broadly, economists said that although the months-long downward trend appears to be holding, new jobless claims remain at unprecedentedly high levels six months into the coronavirus recession.

“There is clearly a stalling out in the improvement in the domestic labor force,” said Joseph Brusuelas, chief economist at the consulting firm RSM. “In particular, the rise in the number of persons on unemployment insurance and the increase in the number of people on PUA need to be monitored, because that signals we’re likely to have a sustained issue over the next couple of years inside the labor market, particularly pertaining to transportation, leisure, hospitality in general, aviation and hotels in particular.”

Layoffs piling up: The weekly jobless claims report comes as major employers announced new layoffs in a still-struggling economy. This week, Disney said it would fire 28,000 workers, Allstate Insurance said it would lay off 3,800, Ralph Lauren said it would lay off 3,700 and Dow Inc. said it would reduce its global staff by 6%. Major airlines said they would begin furloughing staff, including 19,000 at American Airlines and up to 16,000 at United Airlines, although those moves could be reversed if the companies received a new round of federal aid in the bill currently under negotiation.

Incomes slipping: Personal income in the U.S. fell in August by 2.7%, the Commerce Department said Thursday, with the expiration of enhanced unemployment benefits playing a major role. “The decline in income highlights the impact of the expiration of the extra $600 in weekly jobless benefits at the end of July, which had temporarily propped up household finances and helped spur consumption,” Bloomberg’s Olivia Rockeman reported. “While President Donald Trump in early August announced an additional $300 a week in federal jobless benefits, many states didn’t get those funds out until early September, and the benefit only lasts six weeks, meaning that further declines in income could continue later this year.”