1.5 million more laid-off workers seek unemployment benefits

WASHINGTON (AP) — About 1.5 million laid-off workers applied for U.S. unemployment benefits last week, a historically high number, even as the economy increasingly reopens and employers bring some people back to work.

The latest figure from the Labor Department marked the 11th straight weekly decline in applications since they peaked at nearly 7 million in March as the coronavirus shut down much of the economy and caused tens of millions of layoffs. The decline was much smaller, though, than in recent weeks, falling just 58,000.

The total number of people receiving unemployment aid also fell slightly, reflecting the return of many to their old jobs.

The job market appears to have begun a slow recovery. In May, employers added 2.5 million jobs, an increase that suggested that the job market has bottomed out. The unemployment rate declined from 14.7% to a still-high 13.3%.

Even with the May hiring gain, nearly 21 million people are officially classified as unemployed. And including people the government said had been erroneously categorized as employed in May and those who lost jobs but didn’t look for new ones, 32.5 million people are out of work, economists estimate.

Thursday’s report also showed that an additional 760,000 people applied for jobless benefits last week under a new program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.

The steady decline in jobless claims follows some other encouraging reports that suggest that the lifting of shutdown orders has sparked some pent-up demand from consumers, whose spending largely drives the economy. Most economic gauges remain far below their pre-pandemic levels, though, and some analysts question whether the recent gains can be sustained, especially if the virus were to surge back.

Last month, retail and restaurant sales jumped nearly 18%, the government said Tuesday, retracing some of the record plunges of the previous two months. Even so, retail purchases remain a sizable 6% below their year-ago levels.

Furniture store sales nearly doubled, and clothing sales nearly tripled, though both remain far below their levels before the coronavirus struck. Clothing store sales are still down 60% compared with a year earlier.

With nearly record-low mortgage rates, applications for home loans reached an 11-year high last week. But even though the number of homes under construction rose in May, they remain substantially below last year’s pace.

The economy and the job market face a raft of uncertainties that could slow or even derail a recovery. Business re-openings have caused spikes of viral infections in nearly half of states, a trend that could lead consumers to pull back again on shopping and dining out and reverse any economic gains.

Restaurants, bars, gyms and movie theaters will likely rehire only a portion of their workforces. Many consumers won’t fully resume their previous habits of shopping, traveling and going out until a vaccine is available.

One key reason why consumer spending has rebounded is that government aid programs, from one-time $1,200 stimulus checks to $600-a-week in supplemental federal unemployment aid, have helped offset the loss of income for laid-off Americans. Yet nearly all the stimulus checks have been issued. And the supplemental federal jobless aid is set to expire July 31.

“Recently, some indicators have pointed to a stabilization, and in some areas a modest rebound, in economic activity,” Federal Reserve Chairman Jerome Powell said Tuesday in testimony to a Senate committee. Yet “until the public is confident that the disease is contained, a full recovery is unlikely.”

Corinne Cook, who lives in Kissimmee, near Orlando, felt a huge relief to finally receive her unemployment benefits last week after a month and a half of battling Florida’s bureaucracy.

Cook, 28, had moved to the area in September for an 18-month contract position as a 3-D modeler for Walt Disney, a job involving sculpting character prototypes that were printed on 3-D printers. But she was laid off in mid-April after the parks closed down.

She is receiving the minimum state unemployment benefit from Florida, $125 a week, because the state has no record of her prior earnings in New Jersey, even though she said she has uploaded, mailed and faxed her documents from her job there. If her previous earnings were properly credited, her state benefits would more than double. She is grateful, though, for the extra $600 in federal unemployment benefits, which have allowed her to pay off some bills.

“It was very stressful,” she said. “I definitely lost it a few times.”

She is applying for a new job and hopes to stay in the area. But there aren’t a lot of open positions in her field.

“The future is very unknown at this point,” Cook said.

Other data paints a picture of an economy slowly on the mend. A weekly survey of small businesses by the Census Bureau found that in the week that ended June 6, nearly 10% of small firms said they were hiring. That’s double what it was five weeks ago. About 13% said they were still cutting jobs, less than half of what the figure was in late April.