Thursday, July 23, 2020
Initial claims: a jolt of bad news, as Mitch McConnell and the GOP dawdle on an emergency benefit extension
- by New Deal democrat
This morning’s report on initial and continuing claims, which give the most up-to-date snapshot of the continuing economic impacts of the coronavirus on employment, was a jolt of bad news, as claims increased by over 100,000 to the worst level in 4 weeks. The trend of slight improvement to “less awful” since the end of March was broken, and there was also a slight negative revision to last week’s number.
Here is the week over week % change since the end of March:
There were 1.416 million new claims, 109,000 more than one week ago.
Continuing claims (red in the graph below, right scale), which lag by one week, did continue to decline by just over 1.1 million, from 17.304 million to 16.197 million, as opposed to the increase in initial claims (blue, left scale):
I expect continuing claims to also reverse and I move higher in the next week or two.
This morning’s report was discouraging on several levels. Having over 1 million new claims each week more than four months after the start of the pandemic means that severe economic damage continues to spread out. That claims rose means that the damage is starting to worsen again, presumably as some re-opened businesses close again, probably some of them for good. Finally, the $600/week Congressional emergency unemployment relief is expiring this week, which means that starting next week, the damage will be amplified considerably.
The lack of Congressional action can be laid entirely at Mitch McConnell’s feet. He deliberately waited until the benefits were set to expire, planning to hold them hostage and jam up House Democrats. Instead, his own caucus is apparently deeply fractured, and not on the same page as the White House. Since there is no deal that can be done in time, all of the pressure has boomeranged back on him and his caucus. I expect enormous pressure to be brought to bear for a simple, “clean,” extension of the emergency benefits, and the longer McConnell and the GOP dawdle, and the more they try to reduce the benefits, the worse the political damage will be for them.