As the economy recovers, US jobless claims fall to a pandemic low

Last week, 310,000 Americans applied for unemployment benefits. This is a low number and a sign of the fact that the rise in COVID-19-related cases has not led to widespread layoffs.

As the economy recovers, US jobless claims fall to a pandemic low

Thursday's report from the Labor Department showed that jobless claims dropped from a revised total of 345,000 the week before. Since January 1, the number of applications has been steadily declining. This is due to the gradual reopening the economy following the pandemic recession.

The spread of the delta variant in this summer's heat has added pressure to the economy and job market. On Wednesday, the Federal Reserve reported that U.S. economic activity "downshifted" in July and August, in part because of a pullback in dining out, travel and tourism related to concerns about the delta variant.

The continued drop in unemployment aid applications -- six decreases in the last seven weeks -- shows that many companies are retaining their workers despite slowdown. This trend should continue the economic recovery despite the current wave of infected.

However, the pace of hiring has slowed down -- at least, for now. Last week, the government reported that hiring slowed dramatically in August, with employers adding just 235,000 jobs after having added roughly a million in both June and July. In industries that have face-to-face interaction with the public, such as restaurants, hotels, and retail, hiring dropped. Nevertheless, there were some job opportunities in other areas and the unemployment rate dropped to 5.2%, from 5.4%.

A steady decline in weekly applications for unemployment benefits coincides a reduction of assistance for jobless Americans. With the expiration this week of two federal programs covering gig workers and those who have been unemployed for over six months, more than 8,000,000 people lost their unemployment benefits. These emergency programs were established in March 2020 when the pandemic hit the economy.

This cutoff has not yet been reflected in the weekly jobless claims reports. Two weeks delay is caused by the report's data regarding emergency programs. These two programs had 8.8 million beneficiaries as of Aug. 21.

Additional 2.6 million people were also receiving regular state unemployment assistance. These people have lost the $300-per-week federal unemployment supplement that expired this week.

Some business owners complained that the federal supplement made it more difficult to fill open positions. These pleas led governors of 25 states to cancel the $300 payment and to cut off two state emergency programs. But academic research has found that so far, the early cut-offs in jobless benefits have led to only a small increase in hiring in those states.

Many economists are concerned that the cut-off could lead to financial hardship as the resurgence pandemic may make it more difficult for some people to find work. After recessions in the past, many people received benefits at a lower level than they were during previous emergencies of jobless assistance.