US unemployment claims hit 1.48 million last week

Another 1.48 million Americans filed first-time unemployment claims last week, the Labor Department said Thursday, but the number seeking unemployment benefits fell 60,000 from the previous week.

Continuing claims, or those receiving benefits for more than one week, fell by 767,000 to 19.52 million – the first time in two months the total fell below 20 million. These claims peaked at 24.9 million in early May, the Labor Department said.

That suggests layoffs are slowing as the economy stabilizes, but significant rehiring hasn't yet begun despite the 2.5 million jobs added in May.

Macy's said Thursday it's laying off 3,900 people corporate staffers, roughly 3 percent of its overall workforce, as the pandemic takes a financial toll on the iconic department store chain's sales and profits.

Macy's, which also owns Bloomingdale's and Bluemercury, said that the new job cuts would save $365 million this year and about $630 million per year on an annualized basis in the future.

Macy's has been rushing to reopen stores and implemented a range of cost-cutting measures after its sales nose-dived during the pandemic. The company said in February that it was eliminating about 2,000 corporate and support function positions, and that it would close about 125 of its least productive stores in the next three years.

Initial claims receive more attention in the press, but continuing claims smooth out sudden increases or dips provide a more accurate gauge of the labor market.

The number of first-time applications has declined from a peak of about 7 million in late March to about 1.5 million in the last few weeks.

However, that's significantly higher than pre-pandemic levels when the economy expanded and unemployment was at record lows.

The states with the largest number of initial claims for the week ending June 13 – the most recent figures available – were Oklahoma (+7,254), Texas (+5,047), New Jersey (+3,272), New York (+1,351) and Louisiana (+1,243).

For the week ended June 6, the states with the highest unemployment rates were Nevada (22.6 percent), Hawaii (18.3), New York (17.8), California (17.3), Michigan (16.9) Louisiana (16.2), Massachusetts (16.2) and Connecticut (15.8), the Labor Department said.

The unemployment rate is the percentage of unemployment workers in the total labor force.

Analysts at Jefferies Financial Group, a New York investment bank, said the coronavirus appears to be spreading in Arizona, Texas and Utah. As a result those states are experiencing an economic slowdown after earlier signs of a rebound.

The US economy slid into recession in February, a month before the coronavirus pandemic hit the economy, the National Bureau of Economic Research reported.

Retail spending increased sharply last month, but still remains far below pre-pandemic levels. Consumer spending represents about two-thirds of the US economy.

Congress is expected to debate the continuation of an extra $600 in weekly jobless benefits scheduled to expire at the end of July. The money, which is in addition to unemployment benefits provided by the states, was included in the $1.8 trillion Coronavirus Aid, Relief and Economic Security Act (CARES) US President Donald Trump signed into law in March.

The Brookings Institution, a Washington-based think tank, said states offering enhanced unemployment benefits are recovering from the downturn more quickly, including fewer layoffs and a faster increase in rehiring.

In a research report,  Brookings said the recession caused by the COVID-19 pandemic differs sharply from the 2007-2009 recession caused by the collapse of the subprime mortgage market.

"In this (recession), economic activity collapsed and bottomed out in a few weeks, compared with months or years," Bookings said in a statement.

"The downturn was driven by service businesses such as restaurants and retailers rather than the typically more cyclical manufacturing and construction industries. Also, many more laid-off workers in this recession were expected to get their jobs back, at least initially."

But the nonpartisan Congressional Budget Office said continuing the additional $600 in unemployment benefits through January 2021 would slow hiring for remainder of this year and all of next.

The US Labor Department will release June's hiring data next week. Employment increased in May, but still remains about 20 percent below pre-pandemic levels in February.