Why Initial Unemployment Claims Point Up Need For Coronavirus Stimulus Spending

Initial unemployment claims last week rose to 870,000, up 4,000 from the previous week's level as talks on the next round of stimulus spending stalled in Washington, the Labor Department reported Thursday. The four-week moving average fell 35,250 to 878,250.

The Bureau of Labor Statistics pegged the insured unemployment rate at 8.6% for the week that ended Sept. 12, down 0.1 point from the previous week.

“As these data show, the recovery still remains far too slow for millions who were laid off in the spring and summer. The Labor Department reported separately that just shy of 1 million workers exhausted their first six months of state benefits in August — the highest one month figure since the data began being recorded in 1971,” said Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation.

“Today’s report comes during a week in which the debate over the Supreme Court and the looming election have closed the door on the possibility of a new agreement to restart pandemic aid before December. The additional aid to the unemployed is quickly fading away.

“The $600 per week pandemic unemployment supplement expired nine weeks ago,” while nearly half of states have exhausted the $300 supplemental benefit President Trump provided through an executive order, Stettner added in an email to International Business Times.

He also noted pandemic unemployment assistance for caregivers and gig workers expires Dec. 31 without congressional action.

Senior economic analyst Mark Hamrick at Bankrate.com told IBT that although two-thirds of Americans say they have made progress on paying down or staying current on debt, 12% have fallen further behind.

"Despite the financial struggles of millions of Americans, there’s no sign that elected officials in Washington plan further aid. The provisions of the CARES Act have expired and most businesses on the receiving end of the paycheck protection program now have used up those funds," Hamrick said.

Federal Reserve Chairman Jerome Powell earlier this week addressed the need for Congress to act on stimulus spending, saying the economy cannot fully recover on its own until the coronavirus pandemic, which has killed some 202,000 Americans, is overcome.

“A full recovery is likely to come only when people are confident that it is safe to reengage in a broad range of activities. The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government,” Powell said in testimony before the Senate Banking, Housing and Urban Affairs Committee.

The seasonally unadjusted data indicated 824,542 workers filed initial claims last week, compared to 175,394 during the comparable week of 2019, with 630,080 claiming pandemic unemployment assistance. Two weeks prior, 11.5 million people claimed pandemic unemployment assistance and an additional 1.6 million claimed pandemic emergency unemployment compensation.

More than 26 million Americans claimed unemployment benefits for the week that ended Sept. 5 compared to less than 1.5 million in the comparable week last year. Extended benefits were available in 46 states, along with the District of Columbia, the Virgin Islands and Puerto Rico.

For the week of Sept. 5, the highest employment rates were reported in Hawaii, California, Nevada, Puerto Rico and New York.

For the week of Sept. 12, the biggest increases in claims were reported by Indiana, Kansas, Illinois and Michigan while the biggest decreases were reported by California, Texas, Louisiana, Georgia and Washington.