The number of new US jobless claims stayed roughly flat last week in the latest sign that the country’s economic recovery is slowing as it heads into the autumn.
Department of Labor (DoL) data showed that 840,000 Americans filed new jobless claims in the week ending 3 October, down just 9,000 from the week before. The Department revised up the previous week’s total by 12,000 to 849,000.
It comes after US President Donald Trump said on Tuesday night that he had brought to an end talks between lawmakers over a potential new round of fiscal stimulus. He said it would have to wait until after the 3 November presidential election.
Many economists have said this is a bad idea. The same day, US Federal Reserve chair Jay Powell warned that the economy needed both fiscal and monetary stimulus amid signs it was slowing down.
US unemployment soared in March and April as states locked down in response to coronavirus. The jobless claims data was the first sign of the calamity: filings peaked at 6.9m at the end of March. The peak during the financial crisis was 665,000.
The claims have fallen drastically since March. Around half of the 22m people who lost their jobs in the spring have returned to work.
But jobless claims have remained stubbornly high over the last three months. The US unemployment rate stood at 7.9 per cent in September, up from 3.5 per cent before the pandemic.
The number of Americans continuing to claim unemployment benefits fell to 11m in the week ended 26 September, the DoL said. That was down 1m from the previous week.
US faces ‘structural unemployment’
Hopes are not completely dead that lawmakers can agree on some sort of stimulus package, however.
Trump sowed confusion on Tuesday by saying that he was ready to sign agreements on policies such as stimulus checks for Americans and support for airlines. However, members of his administration played down the idea that a stimulus bill would be agreed before the election.
Paul Donovan, economist at UBS, said in a note that the US labor market “is approaching a shift”.
“Firms with a future rushed to get back to business as normal, which led to an initial surge in employment. That looks to be fading, inevitably.
“Firms that were in decline are now in a precipitous descent to oblivion, and this will create structural unemployment.”