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American unemployment claims are on the rise again for the first time in 4 months

America’s jobless crisis is far from over. Thursday’s Department of Labor report hammered that point home: Another 1.4 million Americans filed for first-time unemployment benefits last week, marking the first increase in initial claims in 16 weeks.

The weekly first-time claims peaked at 6.9 million in the last week of March and fell continuously until last week, when the trend reversed. Economists had predicted claims would remain steady this week at 1.3 million, the same amount as in last week’s report.

Nearly four months after the Covid-19 pandemic ravaged the health of Americans, their economy and their labor market, the upswing in economic data is tapering off.

A resurgence in infections and a rollback of reopening plans in several states is making it difficult for people to re-enter the labor force following the pandemic lockdown — and it could derail the vulnerable US economic recovery.

Stripping out seasonal adjustments, the number of initial claims is slightly lower than the adjusted figure, but it still rounds up to 1.4 million. During normal times, the seasonal adjustments help smooth the data, but during the pandemic it has been less helpful.

On top of regular claims for unemployment benefits, nearly 1 million people across 49 states applied for pandemic unemployment assistance, a program Congress rolled out as part of the government’s Covid response. It provides benefits to workers who aren’t typically eligible, such as freelancers and the self-employed. The program stands to expire at the end of the year.

Some news was less dire. Continued claims, which count people who have applied for benefits for at least two consecutive weeks, slipped to 16.2 million, down by more than 1 million from the week prior. The continued claims number trails the first-time applications by one week. So an uptick in the continued-claims number over the next few weeks could be a bad sign for the job market recovery.

Another major concern is the expiration of Washington’s $600 weekly boost to unemployment benefits. It’s technically set to end July 31 — but in reality this week is the last that the extra benefits will be paid out, because payments are provided for weeks ending on a Saturday or Sunday. July 31 falls on a Friday.

“The rising unemployment claims are a deeply concerning sign as the $600 weekly unemployment benefits soon expire for tens of millions of unemployed Americans,” said Glassdoor Senior Economist Daniel Zhao in emailed comments.

An estimated 25 million Americans are receiving the extra payments on top of their state unemployment benefits, and it’s pumping an additional $15 billion into the economy, according to The Century Foundation, a progressive nonprofit think tank.

Jobless Americans say the bigger checks are helping them to pay their rent, buy medication and put food on the table for themselves and their families. State benefits on their own typically replace only 40% of wages. Plus, they argue, there are few jobs to be had as the nation contends with another surge in coronavirus cases.

But businesses are worried that they are having trouble bringing workers back because the Congressional boost pays many recipients more than they made while employed.

Looking ahead, Senate Republicans and White House negotiators reached a deal for parts of the next stimulus package on Wednesday. The White House also raised the possibility of a short-term extension of the unemployment benefits to buy time to find a broader agreement, but the leadership of Senate Republicans rejected the idea.

Phil Mattingly, Lauren Fox and Ted Barrett contributed to this report.

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