Another 1.8 million Americans made first-time claims for unemployment benefits last week, pushing the number of people who have lost their jobs amid the COVID-19 pandemic above 42 million, the Labor Department reported Thursday.
Weekly jobless claims totaled 1.877 million; Dow Jones analysts had estimated a job loss of 1.775 million. Last week’s number was an improvement from the previous week’s jobless claims of 2.126 million.
Continuing claims, which show how many people remain unemployed and drawing benefits, totaled 21.5 million, a gain of 649,000 over the past week, also worse than Dow Jones analysts had expected.
As states have finally begun to reopen, the numbers are expected to continue to recede. The 1.8 million claims last week is the lowest total since the coronavirus crisis began. In fact, the numbers have dropped for eight weeks in a row since the week ending March 25, when first-time claims hit nearly 7 million.
But the Congressional Budget Office (CBO) has offered a bleaker picture. The non-partisan government agency said in its May report that the lockdowns will hamper the U.S. economy through next year, inflicting long-term damage to business investment and the labor market.
The office forecast that the nation’s gross domestic product (GDP) will plunge 38% in the second quarter of the year, which would be the worst drop on record. And by the end of 2020, the CBO said 26 million more Americans will be unemployed at the end of the year, more than triple the number of job losses that occurred during the 2008 financial crisis.
“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease restrictions,” the CBO’s May report states. “The labor market is projected to materially improve after the third quarter—hiring will rebound and furloughs will drop significantly as the degree of social distancing diminishes. To account for the chances of the pandemic persisting or reemerging, CBO projects that social distancing will continue, but to a declining degree. The persistence of social distancing will keep economic activity and labor market conditions suppressed for some time.”
“Over the 2020–2021 period, economic activity is projected to fall by the greatest amount in the second quarter of 2020, because of the pandemic and the social distancing measures,” the CBO projects. “Real GDP — or real output — is projected to pick up during the second half of the year, and labor market conditions are expected to materially improve after the third quarter as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The recently enacted laws will contribute to the moderate rebound in economic activity by boosting consumer spending and by preserving some connections between workers and employers so that firms can ramp up operations more quickly as the degree of social distancing subsides. Nonetheless, challenges in the economy and in the labor market are expected to persist.”
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