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More than 1.43 million people filed for unemployment benefits for the first time last week, according to new weekly data from the Department of Labor. It’s the second-straight week that the number has risen.
The extent of the economic damage wrought by the coronavirus pandemic was further revealed on Thursday, with the gross domestic product for the second quarter sinking by a record 32.9 percent annualized, according to data from the Bureau of Economic Analysis.
That number is in stark contrast to the robust growth seen before the government was forced to tap the brakes on the economy to halt the spread of the virus. Average GDP has been at around 2 percent, on an annualized basis, but the mass shuttering of businesses, stores, and restaurants has curtailed consumer spending, which powers almost 70 percent of the U.S. economy.
Although economic activity did pick back up in May, a spike in coronavirus cases in the sunbelt states has generated a new round of shutdowns, throwing many more Americans out of work.
Federal Reserve Chairman Jerome Powell has repeatedly warned of a sluggish economic recovery if millions of workers cannot return to their previous jobs and need to retrain or learn new skills.
“It looks like the data are pointing to a slowing in the pace of the recovery,” he said in a press conference on Wednesday, after the Fed’s monetary policy meeting.
Already, millions of Americans are struggling to put food on the table. According to the Census Bureau’s weekly household survey, released on Wednesday, around 24 million Americans said they had “sometimes not enough to eat,” with 5.4 million saying they had “often” had not enough to eat.
Furthermore, the additional $600 per week in benefits set aside as part of the CARES Act for out-of-work Americans expires at the end of the month. For many families, the extra cash has been a lifeline, covering food, housing, even life-saving medicine. Congress is still deadlocked over whether to extend the benefit, with some lawmakers arguing that the size of the payments eliminates the incentive to work.
While the debate continues in Washington, D.C., rents are due this weekend — and by the end of the year, 29 million Americans could be facing eviction, according to the COVID-19 Eviction Defense Project, an advocacy partnership with the Aspen Institute and the Bell Policy Center.
“The resurgence of COVID-19 cases and the impact that has on the economy is spurring the Fed’s anxiety,” said Diane Swonk, chief economist at Grant Thornton, noting that the Fed is clearly more concerned about the economy than it was just a month ago.
“Powell is willing to do more but is limited, and needs Congress to step up to the plate,” Swonk said.
