Jobless claims fall below 1 million for the first time since March
The number of out-of-work people filing for unemployment benefits fell below 1 million for the first time since March, when the coronavirus pandemic brought the economy to a standstill. Even so, the number of weekly jobless claims remains far higher than before the crisis.
About 963,000 people filed for unemployment benefits for the week ending August 8, a decrease of 228,000 from the previous week, the Department of Labor said on Thursday. Economists had expected claims to be above 1 million for the most recent week.
Another 489,000 Americans filed for Pandemic Unemployment Assistance, a new federal program that aims to cushion self-employed and gig workers from the resulting economic fallout.
The better-than-expected jobless claims signal that some employers are rehiring workers as they regain their footing. But some workers may have opted against filing for unemployment due to the expiration of the extra $600 in weekly unemployment benefits last month, noted PNC chief economist Gus Faucher.
Even so, claims remain about three times higher than before the pandemic, and a staggering 28.3 million people were receiving unemployment aid at the end of July. That signals the labor market is far from fully recovered, especially as some states like Texas and Florida cope with rising COVID-19 cases and scale back their reopenings.
"The risk of permanent job losses and damage to the labor market remains high, which will slow the pace of recovery," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, in a research note. "The economy faces a long and uncertain road back to pre-pandemic levels of prosperity."
Income cliff
Jobless workers are facing a steep income cliff this month now that the extra $600 in weekly federal payments that provided critical support for millions of laid-off Americans has expired, as of the end of July. Congressional negotiations about extending those benefits have stalled out, with Republicans arguing that the payment amount is too high and could dissuade out-of-work Americans from returning to work.
Even so, economists have found no evidence that the extra $600 in jobless benefits have convinced out-of-work adults to stay on the dole. With those benefits expired, President Donald Trump signed an order to partially extend extra benefits to the nation's unemployed, at a maximum of $400 per week, rather than $600.
$309 in weekly aid
The 963,000 people who filed for jobless claims — as well as the millions who continue to draw benefits — are now receiving an average of $309 per week in aid, according to Andrew Stettner, senior fellow at The Century Foundation, a progressive think tank.
"These workers must survive on meager base benefits because of the failure of the Administration to reach an agreement with Congress to extend the [Pandemic Unemployment Compensation] lifeline," Stettner said in a statement.
—With reporting by the Associated Press.