The Fed said Thursday that more than 3.2 million Americans remained on traditional state unemployment benefits, as the number of people seeking new claims exceeded 400,000 last week.
According to data released Thursday by the Labor Department, there is a decline of nearly 29,000 in consecutive claims from 3.25 million a week ago. The figure stood at around 16 million at the same time last year, which was hit by the pandemic.
Consistent claims have declined significantly since reaching their peak in 2020, but the figure is almost double the pre-pandemic level.
The Fed added on Thursday, new weekly filings for jobless claims, seen as a proxy for layoffs, reached 419,000 last week, a jump from last week’s revised level of 368,000.
Economists polled by the Dow Jones last week expected exactly 350,000 initial claims for unemployment.
There has been a steep decline in weekly new claims from a 2020 peak of about 6.1 million new claims in a week. The week-on-week numbers have swung closer to historical averages over the past few months as hiring accelerated.
The country was making an average of over 200,000 new claims per week in 2019.
The jobless data comes after the US managed to add 850,000 jobs last month, reflecting economists’ hopes that a labor market recovery is heating up.
Still, some economists say the recovery is too slow and threatens to derail America’s macroeconomic rebound.
Earlier this month, the Labor Department Reported US job opportunities rose again to over 9.2 million in May, indicating that there are a lot of open positions.
and a pole published More than 1.8 million unemployed Americans have turned down jobs during the pandemic because of the generosity of unemployment insurance benefits, found last week by Morning Consult.
In a bid to accelerate the job market, a handful of states have moved to cut unemployed people away from pandemic-enhanced federal unemployment benefits, which give unemployed workers an additional $300 per week.
Many business owners, Republicans and economists have blamed the additional benefits for the labor shortage, saying unemployment payments keep workers at home while businesses are understaffed.
Economists say that in addition to the federal unemployment program, other causes of the labor crisis include COVID-19 and fear of school closures, keeping parents at home.
Alaska, Iowa, Mississippi and Missouri all ended the federal program on June 12, about three months before it ended.
The other eight states ended the program on June 19, though some of the moves remain court bound.
In total, at least 25 states are moving away from the federal program to try to get workers back into the labor market.
President Biden confirmed last month that he would allow the federal unemployment benefit program to end after Labor Day.
The White House nonetheless defended the additional benefits, saying businesses should pay people more.
But many economists are becoming increasingly concerned about further increases in prices for wage inflation. Companies have started raising prices, blaming high labor and supply costs.
For example, Chipotle has said it has increased the prices of its menus by up to 4 percent to cover the cost of higher wages for employees. Executives at other major companies, including General Mills, Unilever and JM Smucker, have also recently warned about rising costs and inflationary pressures.
With the cost of everything from apparel and cars to bacon and milk spiking, shoppers are bearing the brunt of rising prices.