SPONSORED:

Weekly jobless claims rise to 1.4 million, first increase since March

Weekly jobless claims rise to 1.4 million, first increase since March
© Getty Images

New weekly claims for unemployment insurance rose for the first time since March last week as more than 1.4 million Americans applied for jobless benefits for the first time amid the second surge of coronavirus cases, according to the Department of Labor.

In the week ending July 18, seasonally adjusted initial claims for jobless benefits totaled 1,416,000. Another 975,000 people applied for Pandemic Unemployment Assistance, a program for those who don’t qualify for traditional jobless benefits, that week, bringing the total number of new weekly claims above 2.3 million.

After months of steady, though narrowing declines, weekly unemployment claims rose for the first time in 15 weeks. Roughly 1.3 million people filed claims for traditional unemployment benefits the previous week.

ADVERTISEMENT

The rise marks a troubling sign for the U.S. economy as another wave of novel coronavirus cases slows the nascent recovery from the downturn caused by the pandemic. After two months of net job gains in May and June that sunk the unemployment rate to 11.1 percent from 14.7 percent, that progress appears to be in danger of reversal.

"The labor market took a sad step back in the most recent week of jobless claims," said Robert Frick, corporate economist at Navy Federal Credit Union.

"The combination of the resurgence of COVID-19, especially across the Sun Belt, bankruptcies, and secondary layoffs finally stopped the decline. Expect more forecasts for the third quarter expansion to be revised down, and expect everything from retail sales to consumer confidence to take a hit."

The rising number of Americans seeking unemployment insurance also raises the stakes of the battle over how to extended enhanced jobless benefits.

The Coronavirus Aid, Relief and Economic Security (CARES) Act signed by President TrumpDonald TrumpThe Memo: The Obamas unbound, on race Iran says onus is on US to rejoin nuclear deal on third anniversary of withdrawal Assaults on Roe v Wade increasing MORE in March increased weekly unemployment benefits by $600 in each state. That increase is set to expire on July 31.

ADVERTISEMENT

Trump and most Republican lawmakers have ruled out extending the $600 increase in total since it pushes unemployment benefits above the average wage in many states. While opponents of the increase claim it is a disincentive for Americans to return to work, economists argue that the boost is doing more good for the U.S. by increasing consumer spending and staving off future evictions. 

Democrats, progressive activists and economists across a wide ideological spectrum have urged Congress to keep a generous increase to unemployment benefits as the U.S. faces another pandemic-driven downturn.

"There are only 5.4 million job openings. So even if the expanded payments are reducing work search intensity and discouraging some workers from returning to work, the bigger reason 25 [million] people aren't being reabsorbed into the labor market quickly is low demand for workers," said Julia Pollak, labor economist at job recruitment website ZipRecruiter, in a tweet.

Updated at 9:16 a.m.