The longer consumers remain restricted and businesses remain closed or limited, the more uncertain a labor market recovery becomes and the higher the probability of a slow and drawn-out economic recovery.
Both are troubling signs for a labor market whose recovery from the pandemic was already slowing.
Many jobless benefit recipients are now receiving only regular state unemployment payments because a federal weekly supplement of $300 has ended in almost all states. In the meantime, tens of thousands of workers in the airline industry have been furloughed without another round of aid, and budgets for state and local governments have been busted leading to even more layoffs, which experts warn will only increase without federal dollars to keep Americans off the unemployment line. "The recovery in the labor market will continue to slow down as the economy and the job market can not operate at full capacity until a vaccine is widely available".
U.S. stocks fell at the open yesterday. "As the virus remains in the driver's seat, today's elevated claims cast a shadow over the fate of the USA labor market in the next half year", he said.
Note: The state of California has announced a two-week pause in its processing of initial claims for unemployment insurance benefits.
Indeed, the number of people receiving extended benefits in late September, the latest data available, jumped 800,000 to 2.8 million.
Jobless claims increase to 898,000, a sign the recovery could be stalling
In the last monthly employment report before the November 3 presidential election, the Labor Department said that unemployment rates for September fell to 7.9 percent, down from 8.4 percent in August. These figures aren't adjusted for seasonal trends, so the government reports them separately from traditional jobless claims. "The recovery in the labour market will continue to slow down as the economy and the job market can not operate at full capacity until a vaccine is widely available", said Bloomberg Economist Eliza Winger.
But it also reflects the fact that potentially even more people have used up their regular state benefits - which usually expire after six months - and have transitioned to extended benefit programs that last an additional three months.
The supplemental US$600 a week in jobless benefits authorized by the CARES Act in late March expired in July, and since then lawmakers have been at a stalemate over another large stimulus bill.
"As we see more and more people shift to the ranks of the long-term unemployed, it suggests that this is not going to be almost as quick of a downturn and that there is going to be long-term damage that results from what otherwise looks like a pretty short recession", said House of Wells Fargo.
Claims for Pandemic Unemployment Assistance, for gig and self-employed workers, went down, to about 373,000 from about 460,000.
In total, 11.2mn were claiming benefits through the programme in the week ended September 26.