WASHINGTON – The number of Americans seeking unemployment benefits declined last week to a still-high 837,000, evidence that the economy is struggling to sustain a tentative recovery that began this summer.
The Labor Department’s report, released Thursday, suggests that companies are still cutting a historically high number of jobs, though the weekly numbers have become less reliable as states have increased their efforts to root out fraudulent claims and process earlier applications that have piled up.
California, for example, which accounts for more than one-quarter of the nation’s aid applications, this week simply provided the same figure it did the previous week. That’s because the state has stopped accepting new jobless claims for two weeks so it can implement anti-fraud technology and address a backlog of 600,000 applications that are more than three weeks old.
Overall jobless aid has shrunk in recent weeks even as roughly 25 million people rely upon it. The loss of that income is likely to weaken spending and the economy in the coming months.
A $600-a-week federal check that Congress provided in last spring’s economic aid package was available to the unemployed in addition to each state’s jobless benefit. But the $600 benefit expired at the end of July. A $300 weekly benefit that President Donald Trump offered through an executive order lasted only through mid-September, although some states are still working to send out checks for that period.
A result is that Americans’ incomes and spending are declining or slowing. Total paid unemployment benefits plunged by more than half in August, according to the Commerce Department. That pulled down Americans’ incomes for the month by 2.7% – a trend that, if it continues, could weaken economic growth.
Consumer spending did rise 1% that month, down from 1.5% in July.
But that increase relied in part on consumers drawing upon their savings.
“Unless employment growth picks up, or additional (government) aid is extended, consumer spending is at risk of slowing dramatically during the second phase of the recovery,” said Gregory Daco, an economist at Oxford Economics.