Not completely unexpected, but certainly disappointing news as the nation struggles with returning to economic stability. The impact of renewed restrictions on commerce in the COVID-19 pandemic has pushed the number of initial jobless claims upward for the first time in almost four months. The number of claims increased by over 100,000 from the previous week to 1,416,000, when analysts expected a report of 1.3 million.
However, there was a big move off of paid benefits at the same time, emphasis mine:
In the week ending July 18, the advance figure for seasonally adjusted initial claims was 1,416,000, an increase of 109,000 from the previous week’s revised level. The previous week’s level was revised up by 7,000 from 1,300,000 to 1,307,000. The 4-week moving average was 1,360,250, a decrease of 16,500 from the previous week’s revised average. The previous week’s average was revised up by 1,750 from 1,375,000 to 1,376,750.
The advance seasonally adjusted insured unemployment rate was 11.1 percent for the week ending July 11, a decrease of 0.7 percentage point from the previous week’s revised rate. The previous week’s rate was revised down by 0.1 from 11.9 to 11.8 percent. The advance number for seasonally adjusted insured unemployment during the week ending July 11 was 16,197,000, a decrease of 1,107,000 from the previous week’s revised level. The previous week’s level was revised down by 34,000 from 17,338,000 to 17,304,000. The 4-week moving average was 17,505,250, a decrease of 758,500 from the previous week’s revised average. The previous week’s average was revised down by 8,500 from 18,272,250 to 18,263,750.
In the past five weeks, the number of people on paid unemployment has dropped by more than four million. The benefits have not expired yet, so these are people who have returned to work rather than continue to receive benefits. That does tend to downplay the argument that the CARES Act unemployment bonus is significantly holding back returns to work, even if it doesn’t entirely negate it.
So if people are going back to work, why are initial weekly jobless claims still so high? These are massively higher numbers than we saw even at the peak of the Great Recession, and they are sustaining week after week. It suggests an extraordinary level of churn in job markets, probably due to businesses closing and failing but other opportunities opening up in lower-paying jobs. We might get a better look in a couple of weeks when the July jobs report comes out.
The highest ranking states for new claims tended to be where the COVID-19 spikes are playing out, too:
California saw the highest number of initial claims filed last week at 292,673, the Labor Department’s report showed. Florida and Georgia each reported more than 100,000 claims for last week as well.
Last week’s apparent stalling in the labor market comes as coronavirus cases in the U.S. rise at a record-setting pace. Data compiled by Johns Hopkins University showed the total number of confirmed cases in the country is nearing 4 million. Coronavirus-related deaths in the U.S. also amount to more than 140,000.
The new upward tilt in claims will almost certainly incentivize Congress to pass a massive new relief bill in an attempt to contain jobs-market damage. Earlier this morning, NBC reported that the White House and Senate Republicans have finally come to a general agreement on the GOP proposal:
Senate Republicans announced Wednesday evening that they have “reached a fundamental agreement” with White House negotiators on how to move forward with a coronavirus relief bill.
After the third meeting this week, Sens. Richard Shelby, R-Ala., chair of the Appropriations Committee; Lamar Alexander, R-Tenn., chair of the Health, Education, Labor and Pensions Committee; and Roy Blunt, R-Mo., chair of the Rules Committee, emerged from the negotiating room with Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows saying they are “completely on the same page” and “in good shape.”
The tentative framework comes amid tension in the party over how to respond to the coronavirus pandemic, which is forcing states to re-evaluate their plans to reopen and to address the growing numbers of cases and deaths.
The legislation remains fluid, and Senate Majority Leader Mitch McConnell, R-Ky., has indicated that he wants to keep the price tag at $1 trillion. Republicans aren’t all on the same page, as some have denounced the cost amid a soaring national debt. But the latest talks show some signs of breaking an intraparty logjam that has kept negotiations at a dead stop for weeks.
Not every Senate Republican is on board, The Hill reported separately:
Asked about the conservative backlash to the 2008 bailout legislation, Paul said the “whole Tea Party movement arose out of that because they were sick of Washington Republicans who weren’t conservative anymore.”
Paul says conservatives are feeling the same anger today over the exploding deficit, which was projected to reach $3.8 trillion for 2020 even before lawmakers started negotiating the newest coronavirus relief package: “There’s a lot of frustration.” …
Cruz declared he is a “hell no” on McConnell’s emerging coronavirus relief proposal. He said Republicans “sadly” envision McConnell’s bill as “an opening gambit,” predicting it will soon balloon in cost.
“This is the swamp in a feeding frenzy. Everybody’s lobbyist has their hand out, saying, ‘Look, if you’re spending trillions of dollars, I want to get some.’ And it’s not right,” he said.
True enough, but citing the Tea Party at this late stage (as the Hill does) has an almost a Happy Days-esque nostalgia feel to it. Until the pandemic hit, both the White House and Republicans on Capitol Hill had the same imaginary-money approach to budgeting as Democrats, with the singular exception of Rand Paul. No one else balked at trillion-dollar annual deficits on either end of Pennsyvania Avenue, and it’s tough to see how that’s any less or more real than a $3.8 trillion deficit now. If deficits don’t matter, then their size doesn’t matter either. If they do matter, then Cruz, Ron Johnson, and Mike Lee have been notably absent from this fight until now.
Unfortunately, a crisis is the worst time to suddenly get deficit and debt religion. The time for discipline was 2017-2019. If people start losing jobs en masse again, they will want Congress to act. That means Phase 4 is all but a certainty, and the best we can probably hope to accomplish is to keep it as focused on the crisis as possible.
Update: I edited the sub-headline about 30 minutes after publication, as I left out “White House.”