Although new, initial claims for unemployment fell below 1 million in the first week of August for the first time since the coronavirus pandemic began, claims climbed back above 1 million the following week and have remained there since.
New claims fell slightly last week compared to the week before, but they remain above 1 million as Republicans in Congress refuse to pass any meaningful stimulus measures.
Though new COVID-19 infections have subsided after a broad resurgence through the summer, many hot spots remain, especially at college campuses that have reopened for in-person learning. With the fiscal stimulus ebbing, signs are growing that the economy’s recovery from the pandemic is slowing. Some economists are dialing back lofty growth estimates for the third quarter.
Initial claims for state unemployment benefits fell 98,000 to a seasonally adjusted 1.006 million for the week ended Aug. 22, the Labor Department said. Economists polled by Reuters had forecast 1.0 million applications in the latest week.
Because this is a seasonably adjusted number, it's possible it will be revised upward next week. It could also be revised downward, but the former is more likely because jobs that normally materialize during the busy summer months to handle crowds won't this year. There are no crowds.
More interestingly, a separate report released by the Commerce Department this morning gave us a new snapshot of what was happening before we shut down any part of the economy.
In a separate report on Thursday, the Commerce Department said gross domestic product plunged at a 31.7% annualized rate last quarter, the deepest decline in output since the government started keeping records in 1947. That was revised from the 32.9% pace reported last month. [...]
When measured from the income side, the economy contracted at a 33.1% rate in the last quarter. Gross domestic income (GDI) declined at a rate of 2.5% in the January-March period. The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, decreased at a 32.4% rate last quarter. That compared to a 3.7% pace of decline in the first three months of the year.
Economic activity declined by almost 4 percent under Trump's "great" economy before the pandemic.
Only a handful of areas had shut down their economies by the end of March. Most states did not until April, some didn't until May, and some never really did.
This is why I firmly believe that if Trump is reelected, we'll never fully recover or at least not in the next four years. Trump's disastrous policies, from his trade war to his tax cuts and his war on health care, were already catching up to us before we shut down our economy. The pandemic buried what was left of the Obama administration's economy and Trump is incapable of bringing it back.