For the 15th straight week, seasonally adjusted first-time claims for unemployment benefits for the week ending July 16 topped 400,000. That’s the number below which many analysts consider the economy to be moving toward a decent level of new jobs being created. Last week’s claim was revised upward to 418,000, which is 10,000 more than the previous week’s revised numbers. Last year at this time, first-time claims hit 466,000.
The four-week running average, which evens out volatility in the weekly figures, fell to 421,250. Both claims figures indicate a continuing weak labor market. In February, when predictions of strong growth were ebullient, first-time claims fell to 375,000, the lowest they had been in nearly three years. But in the past five months they haven’t seen that level again. Sluggish hiring has been one of several factors that have sent growth predictions careening steadily downward.
For example, this week Goldman Sachs downgraded its prediction for 2nd quarter annualized growth in gross domestic product from 2 percent to 1.5 percent. The government will announce its preliminary 2nd quarter GDP numbers July 29. The first quarter’s annualized GDP growth was a paltry 1.9 percent. So far, at least, the third quarter is looking to be only slightly better. That, obviously, is not good news for those out of work, and it may well not be good news for those who have jobs and were beginning to feel more secure in them than they have been in the past three years.
Layoffs are now at a nine-month high. The Wall Street Journal (subscription only) reports:
In May, U.S. public and private employers shed 1.78 million workers, the highest level since August 2010. Among those layoffs, 1.66 million were from the private sector.
Other data indicates that employers are cutting more jobs. The government’s most recent comprehensive jobs report, released in early July, showed the number of people out of work for less than five weeks—a figure many economists use as a proxy for layoffs, since it tallies those recently let go—grew 15.5% from May to June to a total of 3.1 million. That’s the highest level for that gauge since October 2009. […]
While businesses are starting to ratchet up layoffs, government has been trimming jobs for some time. The state and local government sector cut 142,000 jobs this year as states and smaller governments such as cities and school districts trimmed work forces to balance budgets.
Behind the cuts are jittery employers whose faith in the recovery—and, by extension, consumers’ willingness to spend—has been shaken.
“Jittery” is being generous. Meanwhile, Americans who have been out of work for more than 99 weeks are seeing their extended jobless benefits expire if they aren’t in states such as Arizona and Wisconsin, which have already reduced the number of weeks they can receive extended benefits.
That loss of benefits is another drag on economic recovery because jobless benefits provide money that is immediately injected into the economy as recipients buy food and other necessities.