According to the Labor Department’s latest report, the number of Americans filing for new unemployment benefits has hit a two-month high last week. Weekly jobless claims rose about 51,000 to reach a weekly total of 419,000 for the week that ended on July 17. This is yet another sign that while the economy surges ahead after experiencing major setbacks from the COVID-19 pandemic, there are still issues that may hold huge economic growth back. There are parts of the economy that still need to iron out to reach pre-pandemic levels.
However, this latest report wasn’t completely negative. The overall four week average, which gives a more accurate reading of where the labor market stands, rose by only 750, to about 385,250. Therefore, all trends point to overall trends being positive and low.
More people are continuing to return to work, according to Labor Department data, which is also positive for the workforce, as well as for the economy. If this trend continues, then July’s employment report could be quite positive.
The overall increase in people being laid off and filing for unemployment benefits, therefore, shouldn’t be seen as increasingly negative. Many economists forecast that labor numbers would fluctuate as the nation struggles to return to normalcy after the last year. However, some signs do point to forecasts that indicate the labor market and overall economy have more issues to iron out.
For example, many businesses and governments are becoming increasingly worried about the Delta variant of the COVID-19 virus. This variant is quickly causing infection cases to soar, especially in areas where vaccinations are low. While economists don’t foresee lockdowns like we experienced when the pandemic first began last year, this variant could still put stress on businesses and people spending money in different ways.
Therefore, economic recovery may halt or falter in ways not previously expected, because of the Delta variant. Already, we’re seeing how this variant has affected the labor market. For example, some of the largest increases in unemployment filings occurred in Missouri, Texas, Kentucky, and Michigan. Some of these states have already experienced a surge in COVID-19 infections, most of which are the Delta variant, which now accounts for about 80% of all infections in the United States.
Some of these jobless claims also account for season fluctuations, which are normal and in no way are affected by the pandemic. For example, factory closures normally happen during the summer and occur in July. This could account for the increase in unemployment rises, though they aren’t necessarily indicative of a struggling labor market.
Overall, most economists still feel positive about the weekly jobless claims, even as they fluctuate. In a healthy labor market, an average of weekly jobless claims remains at about 200,000 to 250,000. While we still have a way to reach this number, the nation has come a long way since the 6.149 million filed in April of 2020. These weekly numbers will likely continue to fluctuate with each week as the nation deals with the new COVID-19 variants, but also as the economy experiences massive growth.