New clues to the economy’s course will come Thursday morning when the government reports the latest data on initial claims for unemployment benefits.
After surging into the millions early in the spring, weekly filings have settled into a range of 800,000 to 900,000 in recent weeks. That’s extraordinarily high by historical standards and a reminder of the economy’s fragility six months after the coronavirus caused widespread shutdowns of business and consumer activity.
The lockdown has eased in most of the country, but after a spirited economic rebound in May and June, the comeback has cooled.
“Clearly there has been a moderation in the rate of improvement from the early stages,” said Michelle Meyer, head of U.S. economics at Bank of America. “As we get further away from the initial shock, we have less of a natural catch-up, and we face more residual damage.”
What’s more, large and small companies alike continue to let workers go. The Walt Disney Company, whose theme parks in Florida and California have been hard hit by a shortage of visitors, said Tuesday that it would lay off 28,000 workers.
And with the end of a $600 federal weekly supplement to unemployment benefits in July, consumers have less to spend at businesses that are struggling to stay open, like restaurants, bars and retail stores.
Many economists said another round of federal stimulus could ease the situation, but Democrats and Republicans in Congress haven’t been able to agree on a package.
“It’s unclear how many companies can sustain themselves and retain payrolls that support incomes,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “A solid rebound in job growth is now looking more muted.”
Tens of thousands of airline workers were furloughed starting Thursday after a widely supported effort to renew federal stimulus funding for the industry failed to overcome a congressional stalemate.
American Airlines and United Airlines told employees on Wednesday night that they would proceed with more than 32,000 furloughs, though both companies said they would reverse course if lawmakers provided the funding the industry had sought.
“I am extremely sorry we have reached this outcome,” Doug Parker, American’s chief executive, said in a letter to staff. “It is not what you all deserve.”
Passenger airlines received $25 billion in payroll funding under the March stimulus law known as the CARES Act, on the condition that they refrained from broad job cuts until Oct. 1. Unions representing airline workers had garnered bipartisan support in Congress for another round of aid in recent weeks, but the effort was caught in the deadlock over a broader stimulus package, even after airline executives pleaded their case in Washington.
The pandemic’s toll on air travel and the industry has been so severe that tens of thousands of airline employees have already volunteered to take pay cuts, unpaid leave for an extended period, buyouts or early retirement.