Michael Colliss, an unemployment advocate and consultant on unemployment issues and based in Massachusetts on the article database site Gather.com recently published an article on the findings of the U.S. Department of Labor:
Every Thursday, the U.S. Department of Labor releases a report on new jobless claims that have been filed. This report is considered by many who monitor the employment situation to be an extremely important way to determine what gains, if any, are being made in the employment situation on a weekly basis.
On Thursday, August 5, The Department of Labor released a report on individuals filing for unemployment benefits for the first time during the week of July 26 through August 2 that shows a total of 479,000 individuals across the nation filed for unemployment benefits for the first time. This was the highest one week total since April of this year and is a disappointment for those that are looking for any signs that the job market is improving.
Most economists were projecting a lower number of new claims and this report does tend to support the belief that the economy is simply not recovering at a rate anything close to the rate needed to provide jobs to the millions of Americans who lost their job through no fault of their own as a result of the Great Recession. While people loose their job all the time, even when the economy is strong, most economists believe that until such time as new jobless claims fall to about 350,000 per week and stay at or below that level, the unemployment situation cannot look for any significant sustained improvement.
While the economy did see some growth in the last months of 2009 and the first three months of 2010, this report, which shows the highest number of new claims since April, is being interpreted by many economists as further evidence to support the growing belief that the recovery has come close to stalling. Americans who are employed are spending cautiously as they save more and pay down debt. Home sales and construction have slumped after a popular homebuyers’ tax credit expired on April 30. The impact of the federal government’s stimulus efforts is fading.
This increase of 479,000 new claims does not include those whose on-going claims were interrupted in June and July while the Congress debated extending unemployment insurance eligibility, which eventually passed into law on July 22.
The largest increases in initial claims for the week ending August 2 were in Minnesota, Vermont, North Dakota, Wyoming and Colorado.
This disappointing report comes one day before the all-important monthly report on unemployment in America that is scheduled to be released on the morning of August 6. Right now, the official national unemployment rate is 9.5%. Most economists do not expect this number to be lower when the latest report is issued on August 6. In fact, quite a few are even expecting an increase in the unemployment rate.
In a related report issued on Thursday, August 5, the Department of Labor provided the latest number of people collecting unemployment insurance benefits nationwide. As of the week ending August 1, the total number of people collecting unemployment who are in the initial claim period (20 to 26 weeks depending on state) is 4,544,790. The number of people that are collecting unemployment insurance benefits under the federal extensions (due to expire on November 30) is 3,965,000 for a total of 8,509,790 nationwide. This number of course does not include those who, for whatever reasons are unable to collect unemployment insurance benefits yet are unemployed. This means that unless Congress acts to, at the very least, extend eligibility for federal unemployment extensions beyond the current November 30 deadline, as many as four million individuals may well see their benefits cut off again, even though they have not used the full 99 weeks.
This report seems to reinforce the concerns of many that the economy may well be sliding into a second recession (the so-called “double dip” recession. “This report will make more economists and investors worried that the economy is going to slide back into negative growth, which would make it much more challenging to recover,” said the highly respected Robert Lutts, president of Cabot Money Management in Salem, Massachusetts in an interview on CNBC.
If the national unemployment report to be released tomorrow does not show a decline in unemployment, let alone an increase, there will probably be more political pressure on members of the U.S. Congress to take steps to spur job creation and at the very least, extend eligibility for federal unemployment insurance extensions beyond when they are currently expected to expire on November 30.
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