Initial jobless claims for the month of July point to a potential inflection point in the American labor market. July’s data perfectly captured the flattening out of consumer demand and slowing of overall growth in the economy as the pandemic intensified, all of which resulted in rising unemployment.
While firings eased, we expect an elevated and sustained pace of layoffs because of diminished aggregate demand.
While the pace of firings in the economy eased for the week ending July 31, we expect an elevated and sustained pace of layoffs because of diminished aggregate demand.
First-time claims increased by more than 1 million for the 20th consecutive week, with the top line advancing by 1.18 million, well below its 13-week moving average of 1.67 million, according to Labor Department data released Thursday.
Once one accounts for those filing for the federal Pandemic Unemployment Compensation, the number of people applying for first-time assistance rises to 1.84 million.
Continuing claims eased to 16.1 million and imply that the insured unemployment rate declined to 11% from 11.5%. Over the past 20 weeks, there have been 55.3 million first-time unemployment claims.
Through the week ending July 18, there were 31.3 million people who are on some form of unemployment insurance. Those are the people at risk because of the impasse between Congress and the administration over the fifth round of fiscal aid to address the bleak employment situation. The absence of the $600 in unemployment insurance for that cohort effectively withdraws $18.8 billion in potential spending per week as long as the impasse continues.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
