Although the US economy was beginning to show signs of a rebound, the positive sentiment is only short-lived. According to recent data released by the Labour Department, a total of 1.48 million initial jobless claims were made last week, while continuing claims reached 19.5 million. However, economists that were surveyed by Bloomberg had only predicted a total of 1.32 million and 20 million of initial and overall claims, respectively.
The unanticipated increase in unemployment numbers coincides with a resurgence of the coronavirus across parts of the country that have been ambitiously easing restrictions. Although some Americans have returned to work, the support for their respective businesses has remained relatively low. Consumers are instead opting to subdue their spending in response to the growing fear of a potential second wave of the coronavirus.
Despite the slight rebound in the US economy, the continuing unemployment claims suggests there is an even deeper-rooted problem in the US. As a result of the pandemic, deeper labour market damage is most likely present, as producers and consumers are shifting towards a post-pandemic world that is starkly different than before the pandemic. Nonetheless, economists are still forecasting improvements in the labour market; the federal government’s monthly jobs report is slated to be released next week, and it is being anticipated that a total of 3 million workers were added to payrolls for the month of June.
Information for this briefing was found via Bloomberg and the US Department of Labour. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.