The number of U.S. workers who filed new applications for unemployment benefits for the week ended Oct. 10 rose to 898,000, a historically high number that reinforces the view that while parts of the economy have mounted a sharp, V-shaped rebound, others, such as the labor market, are struggling to gain traction.
The Labor Department’s jobless claims report, released Oct. 15 (pdf), also revised up by 5,000 the number of people who filed initial jobless claims the week prior, to 845,000. The number of last week’s filings remains well above the 2007-2008 Great Recession peak of 665,000, highlighting the perspective that the U.S. economy isn’t yet out of the woods.
“There is risk of stagnation in the coming months as layoffs mount, and more businesses struggle or fail. Federal Reserve officials don’t expect to see so-called full employment again until 2023,” Bankrate.com senior economic analyst Mark Hamrick said in a statement to The Epoch Times.
The jobless claims report also stated that the number of people who are continuing to receive unemployment benefits fell by 1.2 million to 10 million. While the drop suggests that many of the unemployed are being recalled to their old jobs, it may also reflect the fact that some have used up the 26 weeks of their regular state benefits and have transitioned to extended benefit programs that last another three months.
“Beneath the surface, a K-shaped recovery has very much come into view,” Hamrick said. “The fissure largely reflects the ability of some service sector employees to work from home, while others who cannot do that suffering either a loss of employment, or income, or both.”
“Even while employment at food and drinking establishments alone is more than 2 million jobs shy of the pre-pandemic period, there’s a home renovation and sales boom, assisted by record-low mortgage interest rates,” he added.
The biggest jumps in the number of people filing initial jobless claims for the week ending Oct. 3 were in Florida (+9,933), Illinois (+6,877), Massachusetts (+4,021), North Carolina (+2,907), and Maryland (+1,714). Meanwhile, the largest drops in weekly unemployment claims were in New Jersey (-3,504), Kansas (-3,312), Pennsylvania (-3,111), Louisiana (-2,835), and Washington (-2,474).
The total number of people claiming benefits in all programs for the week ending Sept. 26 was 25.3 million, a slight drop from the previous week. By comparison, there were 1.4 million people claiming benefits in all programs in the comparable week in 2019.
Though economic activity rebounded in the third quarter as lockdowns were lifted and fiscal and monetary stimulus were poured into the economy, the stubbornly high jobless claims suggest momentum ebbed heading into the fourth quarter.
While third-quarter GDP growth estimates are topping a 32 percent annualized rate, projections for the fourth quarter have been cut to as low as a 2.5 percent rate, from more than a 10 percent estimate.