Initial Unemployment Claims Fall Below 1 Million For First Time Since March

Initial unemployment claims fell to less than 1 million for the first time since late March last week when the coronavirus pandemic took hold to 963,000, the Labor Department reported Thursday. The number of people collecting benefits fell to 28.25 million for the week ending July 25, down by more than 3 million from the previous week but still representing 18% of the workforce.

The Bureau of Labor Statistics said seasonally adjusted claims fell 228,000 from the previous week’s 1.19 million claims while seasonally unadjusted claims for the week ending Aug. 8 fell 15.8% to 831,856.

Forty-nine states reported 10.7 million people claimed pandemic unemployment benefits – the last full week for which the extra $600 a week boost to benefits was available – and 1.2 million claimed pandemic emergency unemployment compensation.

Unemployment expert Andrew Stettner of the Century Fund said the drop in claims could be the result of the expiration of the extra $600 a week, dropping average benefits down to $309 a week. During the weekend, President Trump signed an executive order providing for $400 a week in more federal assistance, but the boost is dependent on cash-strapped states kicking in $100. In addition, the fund from which he planned to take the money will run out of funds in about five weeks.

“Today’s Labor Department report underscores the ongoing impact of the untimely cut off of federal unemployment benefits and offers more evidence that the president’s executive order won’t meet the challenges facing unemployed workers and the economy,” Stettner said.

“Workers will get little to no relief. … Nearly a week after the announcement was made, there are more questions than answers about the new program of ‘lost wages assistance’ advertised as a replacement for the successful CARES Act program.”

Bankrate.com senior analyst Mark Hamrick called the dip in claims “welcome news,” noting many of the states where the coronavirus was surging saw claims fall. But, he said, millions of Americans will struggle to put their financial lives back together even after a vaccine for the coronavirus is developed.

“It remains quite stunning that Congress has yet to agree on a fresh round of relief legislation with so many Americans hurting financially,” he said.

Though claims are lower, Grant Thornton chief economist Diane Swonk called the numbers “staggeringly high,” adding, it is unclear “if people [who were] covered by special pandemic insurance – some of [whom] receive less than $100 per week without supplement - may have not have applied.”

BLS estimated the insured unemployment rate for the week ending Aug. 1 at 10.6%, down 0.4 points from the previous week.

Extended benefits were paid by all 50 states, plus the Virgin Islands and Puerto.

Nevada, Hawaii, Puerto Rico, Louisiana and New York had the highest unemployment rates for the week ending July 25. The largest increase in claims for the week ending Aug. 1 was registered by Rhode Island, while the largest decreases were recorded in California, Virginia, Texas, Florida and New Jersey.