Job market recovery is in trouble after initial claims for unemployment jumped back above 1 million. Experts are predicting that the economy will continue to slow further before the year ends, dashing hopes of a more rapid recovery teased when jobless claims dipped below 1 million.
Another 1.1 million Americans filed for unemployment in early august, according to the Department of Labor. Jobless claims had dipped below 1 million briefly before rising again; experts had been predicting a decrease to 920,000 from 963,000 the previous week. The brief downward trend had economists optimistic that recovery would be more rapid. According to the report, 891,510 people filed for first-time claims, while Pandemic Unemployment Assistance applications rose to 542,797.
"Initial claims rebounded above the one million threshold, taking a step backward on the path to recovery. The modest jump is a stark reminder that claims will likely encounter some turbulence as they fall rather than gliding in for a soft landing." Said Glassdoor Economic Daniel Zhao.
Overall, 28 million Americans are receiving unemployment benefits from the federal government amid pandemic related layoffs. That figure has remained mostly unchanged for at least two or so weeks.
According to some experts, things won't get much better. Economists are concerned that economic recovery will continue to stall throughout the end of the year.
"I think the labor market is set to start weakening again here, particularly if Congress and the administration don't get it together and pass more support," said Moody Analytic's Mark Zandi.
Economic recovery has been consistently threatened since the $600 a week unemployment program expired. Many economists had warned that allowing the stimulus measure to expire would have severe consequences, as the $600 bonus allowed many unemployed households to exercise a great deal of spending power despite the economic circumstances. With unemployment largely insufficient across the country after the CARES act expired, many families are facing drastically reduced spending power, which will slow economic recovery.
The surge in infections across the country will also do little to help recovery. The sudden wave of summer infections and subsequent second wave of shutdowns has put increasing pressure on the economy as many businesses are forced to layoff additional workers to cope.