After a rapid decline in late April and May, the historically high level of initial jobless claims only fell 4% to 1.51 million in the seven days ended June 13. It was the smallest percentage drop in new claims filed traditionally through state unemployment offices since the early stages of the coronavirus pandemic.
By all rights, weekly claims should have fallen even faster and dropped below the 1 million marks by now, economists say. There was a record loss of jobs in March and April, and a rebound in employment in May as the economy began to reopen.
Why haven’t they? Two explanations prevail.
The most widely held view is that the second wave of layoffs has probably taken place as companies struggle to cope with a loss of customers, sales, and profits. Many businesses aren’t operating close to full capacity and simply don’t need as many workers.
“That is extremely worrisome for longer-term demand,” said Lauren Goodwin, economist and multi-asset portfolio strategist at New York Life Investments.
The Wall Street investment bank Jefferies LLC has been tracking the level of web traffic at state unemployment offices. Economists at the firm found that traffic appeared to flat-line in mid-June and end a streak of sharp declines.
The implication: Fresh layoffs are pushing more people to apply for benefits.