California jobless claims rise 287,000 as depressed economy shows coronavirus damage
WASHINGTON — The number of laid-off workers seeking U.S. unemployment benefits dipped only slightly last week but ticked up in California. And the economy shrank in the first three months of the year. It’s evidence of the ongoing economic damage being inflicted by the viral pandemic.
The economy, which contracted 5% in the January-March quarter, is widely expected to shrink at a roughly 30% annual rate in the current April-June quarter. That would be the worst quarterly contraction, by far, since record-keeping began in 1948.
The government reported Thursday that the number of laid-off workers who applied for unemployment benefits declined slightly to 1.48 million last week. It was the 12th straight drop. Still, applications for jobless aid have declined just 5% in the past two weeks, a much slower rate of improvement than in April and May.
What's more, an additional 700,000 people applied for jobless benefits last week under a new program for self-employed and gig workers that made them eligible for aid for the first time. That included nearly 17,000 new such claims in California. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.
The steady if slow nationwide decline in applications does suggest that the job market is gradually healing from the pandemic, which shuttered businesses and sent the unemployment rate up to 14.7% in April, its highest level since the Great Depression. The total number of people who are receiving jobless aid also fell last week, to 19.5 million from 20.3 million, evidence that employers are rehiring some of the workers who had been laid off since mid-March.
In California, the number of people receiving unemployment benefits has been trending upward since the end of March, plateauing to nearly 3 million for the past four weeks. The roll of those getting help dropped to 2.81 million the week ending June 13, the latest available information, from 3 million the week before.
Those getting such benefits had spiked to 4.8 million the week ending April 25, five weeks after the shelter-at-home orders went into effect in the Golden State.
In addition, the government said Thursday that orders for durable goods surged nearly 16% in May, reflecting a rebound in some business activity. Still, the pace of orders and shipments remains far below pre-pandemic levels. And excluding the volatile transportation category, so-called core orders for durable goods rose only modestly last month, reflecting still-sluggish business investment.
The latest economic figures coincide with a sudden resurgence of COVID-19 cases in the United States, especially in the South and West, that’s threatening to derail a nascent economic rebound. On Wednesday, the nation set a record high of new coronavirus cases. Many states are establishing their own records for daily infections, including Arizona, California, Mississippi, Nevada, Texas and Oklahoma. Cases of coronavirus have also jumped in Florida and Georgia.
Should those trends continue, states may reimpose some limits on businesses that would likely trigger job cuts. Whether by choice or by government order, fewer consumers would shop, travel, eat out and visit bars or gyms. All those scenarios would result in renewed layoffs and hinder the economy.
Nervous investors sent stock prices plummeting Wednesday over escalating fears that the economy will suffer further damage from the disease.
“The health crisis continues to cast a dark shadow over the economic landscape,” said Bob Schwartz, a senior economist at Oxford Economics, a forecasting firm.
Before this week’s heightened worries about the pandemic, many economists had been relatively optimistic. In May, the unemployment rate unexpectedly declined, though to a still-high 13.3%. Consumers began spending again, sending retail sales jumping by a record amount. And sales of new homes rose as record-low mortgage rates fueled buyer interest.
In May, employers added 2.5 million jobs, a surprise gain. Still, that hiring represented just one-ninth of all the jobs that have been lost since the pandemic struck. And about 30 million Americans remain unemployed.
The economy shrank at a 5% annual rate in the first three months of the year, the government estimated Thursday. Yet economists envision a much sharper plunge in the April-June quarter -- a rate of up to 30%, which would be the worst since record-keeping began in 1948. Analysts expect the economy to rebound in the second half of this year before potentially regaining its pre-pandemic level in late 2021 at the earliest.