On October 15, the US Department of Labor released data showing that the number of people applying for unemployment benefits for the first time in the United States last week was 898,000. Which was much higher than market expectations and reached the highest level since August.
With the unexpected surge in the number of applicants for unemployment benefits in various states, and more Americans turning to apply for longer-term unemployment benefits, the slowdown in the pace of US economic recovery has become very obvious. Many economists predict that the US labor market may not fully recover until 2023.
Unemployment data unexpectedly surge.
According to data released by the US Department of Labor on October 15th, in the week ending October 10, the number of people applying for unemployment benefits for the first time in the United States reached 898,000 people, a sharp increase of 53,000 from the previous week, the largest weekly increase since July. This data is also much higher than the market expectations of 825,000 people, reaching the highest level since August.
The new coronavirus epidemic has caused a huge impact on the US labor market. The unemployment situation was the most serious in March and April. With the restart of the US economy, the labor market has improved since May. However, with the recent slowdown in employment growth, the number of people applying for unemployment benefits for the first time is still at a high level, with more than 800,000 reported for 7 consecutive weeks. The unexpected surge in data this time further confirmed economists’ judgment on the slowdown in the recovery of the US job market.
The data also showed that the 4-week average of the number of people applying for unemployment benefits for the first time in the United States last week was 866,250, an increase of 8,000 from the previous week. In the week ending October 3, the number of continuous applications for unemployment benefits in the United States was 10.018 million, a decrease of 1.165 million from the previous week.
The analysis believes that the decline in the number of continuous applications for unemployment benefits partly reflects that some Americans have used up the unemployment benefits of the state government and turned to apply for longer-term unemployment benefits, that is, the emergency unemployment benefits established in response to the epidemic. In the week ending September 26, an increase of 818,000 people reached 2.78 million. This federal relief program aims to provide up to 13 additional weeks of unemployment benefits to Americans who have run out of state unemployment benefits.
According to Bloomberg’s analysis, the downward trend in the number of people applying for unemployment benefits for the first time has clearly stopped, and the recovery of the labor market will continue to slow down. The economy and the job market will not be able to operate at full capacity before the vaccine becomes available. The number of applicants for longer-term unemployment benefits has surged, especially in California, New York, Michigan, and Pennsylvania, which indicates that the next employment report will show a further increase in the long-term unemployment rate.
In an interview with CCTV, Boston University economist Kevin Lang said: “Due to health reasons, we will not be able to return to normal within a year. If we are lucky, the process may be faster. Due to the current medical situation, We may not be too lucky. I expect the labor market will become more normal when the economic activity becomes more normal, but in any recovery, this will be a slow process.”
Unemployment is a long-standing problem.
A recent survey of economists conducted by the “Wall Street Journal” showed that the US labor market is facing a protracted period as the new coronavirus continues to spread, the prospects for a new round of fiscal stimulus plans, and the uncertainty of the outcome of the US general election. Recovery process. More than half of these economists said that they expect the labor market to recover until 2023 or later, which is slower than the pace of recovery predicted six months ago.
In the April survey, economists on average predicted that the number of employed people would return to the level of February 2020 by the third quarter of 2022. However, in this survey, only 34.7% of economists insisted on this judgment, that is, the number of employed people will be restored in 2022, while a higher proportion of 42.9% of respondents believe that the labor market will be in 2023. Complete recovery, another 12.2% of the respondents expect the recovery will take longer, and 2% of the respondents expect a complete recovery until 2030.
In this latest survey, economists cited several reasons for the slowdown in the labor market recovery. Including the flu season approaching but the lack of a new coronavirus vaccine may worsen the epidemic, the lack of new fiscal stimulus measures, and the uncertainty surrounding the US election.
At the same time, more data now show that more Americans will face prolonged unemployment. According to data previously released by the US Department of Labor, the number of people who were unemployed for at least 27 weeks in September increased by 781,000 to 2.4 million, the largest monthly increase on record. In addition, another 345,000 people were permanently unemployed in September, bringing the total number to 3.8 million.
In fact, for the millions of Americans who are still unemployed, their jobs before the outbreak of the new coronavirus epidemic may not be restored for many years, or even never restored. As many industries have been forced to adjust due to reduced demand, the former working as bartenders, housekeeping services, or other workers who rely on travel and close interpersonal interaction has begun to become useless.
In response to the weak labor market, Dallas Federal Reserve Bank President Robert Kaplan said on October 14 that during the epidemic, economic activities have shifted to industries that do not rely on face-to-face interaction. Americans most affected by unemployment need help to return to work. In an online discussion organized by the Dallas Fed, Kaplan called for workers in the industries most affected by the epidemic, including women and ethnic minorities, to need training, childcare, and other resources to return to the job market.
The recruitment situation continues to deteriorate.
As the labor market is facing a protracted recovery process, as the important holiday shopping season approaches, American workers will also face a new disadvantage: the number of companies recruiting seasonal workers may decrease.
“The hiring situation is different from previous years,” said Anne Lisabeth Conkel, an economist at the recruitment website Indeed. The number of seasonal recruitments decreased by about 11% compared with last year, and there are many reasons for this. Including companies’ concerns about future sales, some store closures, and even the disruption of the commodity supply chain.
In addition to recruitment sites such as Indeed, some companies that focus on employees’ working hours, such as UKG, have also found the same trend. UKG pointed out that among its customers, manufacturers continue to increase work shifts, while retail workers’ work shifts remain the same even as the Halloween and Christmas approaches. As the epidemic has not yet been effectively controlled, it is inevitable that people will attribute these situations to the store’s expected weak sales performance.
According to Reuters’ analysis, the decrease in holiday hiring may also be related to other factors. Among them, e-commerce continues to expand its footprint in the retail sales field, and the epidemic has accelerated this trend. In addition, the decline in the number of people looking for seasonal jobs indicates that the market is adapting to new conditions, and the number of job seekers seeking home-based jobs is growing rapidly. Many labor economists have predicted such behavioral changes because people tend to believe that jobs that must be on-site are risky.