Initial weekly Unemployment Insurance claims held steady despite record-setting COVID-19 infections across the country. Seasonally adjusted initial claims were 1.30 million for the week ending July 11, and the totals for the week ending July 4 were revised down by 4,000 to 1.314 million. Continued claims decreased by 2.4% from the prior week, to 17.338 million for the week ending July 4. Based on an estimate by LaborIQ® by ThinkWhy, the total of initial and continued claims has dropped by 9.3 million since the peak for the week ending May 9.
In recent weeks, there has been a host of indicators suggesting that people are getting back to work and the economy is recovering. Most economists agree that a recovery will occur in Q3, based on a survey by The Wall Street Journal. Meantime, however, COVID-19 cases continue to increase across the country to mixed responses. States, such as California and Oregon, reissued restrictions on indoor gatherings. But in other states experiencing a surge in cases, such as Florida and Texas, reopening continued along with recommendations and mandates for social distancing and face coverings.
The Small Business Optimism Index jumped 6.2 points in June, according to the National Federation of Independent Business. It’s a challenge for small businesses to keep their doors open, as demand remains below pre-pandemic levels. Retail sales increased 7.5% in June, which would normally be a very impressive number, but it was modest compared to May. Businesses must also comply with policies set by local and state governments to remain open. The Federal Reserve Beige Book noted that getting workers back on payrolls remains difficult, citing childcare and health concerns and unemployment insurance benefits providing some workers with more money than they would bring in employed.
LaborIQ by ThinkWhy estimates unemployment at 16.3% using Unemployment Claims. Increased infections have caused restrictions to be reimposed, adversely affecting business activity. Changes to the $600 per week federal unemployment benefit, due to expire at month’s end, are being considered by Washington lawmakers. The Paycheck Protection Program (PPP) has provided a boost to businesses, but resuming economic activity is critical for some to avoid future layoffs. A second round of stimulus checks also is being considered, with some proposing to target only those with the most need. The ability of governments and health officials to contain the virus’ spread will drive businesses’ ability to sustain momentum.
New restrictions have been imposed and debate is ongoing over continuing supplemental unemployment benefits, another round of stimulus payments and whether students will return to school next month. LaborIQ by ThinkWhy expects initial jobless claims for July should hover around 6.3 million, slightly above the June total, but well below the peaks earlier in the spring. With new infections keeping a strain on the economy, the recovery looks to be off to a slower-than-expected start.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations, and businesses across the U.S.