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Hopes for a rebound of the American economy have been clouded by layoffs, a surge in virus cases and a lack of fresh federal aid.
The American economy is showing fresh signs of deceleration, hammered by layoffs, a surge in coronavirus cases and the lack of fresh aid from Washington.
The Labor Department reported Thursday that 886,000 people filed new claims for unemployment benefits last week, an increase of nearly 77,000 from the previous week. Adjusted for seasonal variations, the total was 898,000.
The rise follows the announcement of layoffs by major companies including Disney and United Airlines in recent weeks and an impasse between Republicans and Democrats over another round of aid for the economy. A recent jump in coronavirus infections, principally in the Midwest and Western states, only added to the grim outlook.
“It’s discouraging,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The labor market appears to be stalled, which underscores the need for new stimulus as quickly as possible.”
The economy rebounded strongly in late spring and early summer as lockdowns eased in many parts of the country and employers brought back workers from furloughs. But those recalls have slowed, even as federal stimulus efforts have waned.
In past recessions, 800,000 new claims for state unemployment insurance in a week would have been extraordinary. But over the last 30 weeks, that figure has become a floor, not a ceiling.
The latest numbers “point to a lot of churn in the labor market, and it appears the rate of firings has picked up,” said Michael Gapen, chief U.S. economist at Barclays.
More layoffs are expected as sectors like leisure and hospitality struggle. In some states, restaurants have been able to salvage some business by serving diners outside, but that option will disappear in many areas as winter approaches.
“The course of the virus determines the course of the economy,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “You can’t fully reopen with the contagion so high.”
A federal program set to expire at the end of the year, Pandemic Emergency Unemployment Compensation, is seeing a surge in new applications. It provides 13 weeks of extended benefits after the end of regular state payments, which typically last 26 weeks.
In the week that ended Sept. 26, the most recent period with available data, nearly 2.8 million people were getting the extended benefits, a jump from fewer than two million the previous week. That increase was roughly equal to the decline in the number collecting state benefits.
But receiving those benefits, which are administered by the states, isn’t so easy, experts say. “The transition from regular state benefits to P.E.U.C. is not going smoothly,” said Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, a left-leaning research group.
In some places, recipients of state unemployment benefits haven’t been notified of their eligibility for the federal extension, and aging computer systems have slowed the processing of applications.
If the program is not extended by Congress, “we’re going to see a disaster,” Ms. Shierholz said. “There will be a huge drop in living standards and an increase in poverty as well as downward pressure on economic growth.”
For workers facing the end of regular benefits, the extended payments have proven to be a lifeline.
Jared Gaxiola of Torrance, Calif., was laid off from his job as a freelance lighting technician in March, after live events were canceled across the country. When his state benefits ran out in mid-September, he was able to get a 13-week extension through Pandemic Emergency Unemployment Compensation.
Mr. Gaxiola, 35, hopes to find a job by the time the federal payments run out in December. But with entertainment work still scarce, he worries about how he will pay his rent in the new year.
“I could probably borrow money from my sister if I needed to,” Mr. Gaxiola said. “But I really don’t want to have to do that.”
Some workers who are caught between an unforgiving job market and uncertain prospects for help from the government have taken matters into their own hands.
For three years, Lea Polizzi worked more than 50 hours a week as a nanny and a freelance photographer in New York City. But in March, when the pandemic hit, the family she worked for on the Upper East Side left the city, and all of her photography gigs dried up.
Ms. Polizzi, 24, filed for unemployment benefits and started receiving about $200 a week from the state, as well as a $600 federal supplement. Those payments enabled her to meet expenses — including the $1,100 rent for her apartment in the Bushwick neighborhood of Brooklyn — while she looked for a job.
But the $600 payments expired at the end of July. Since then, Ms. Polizzi has used about 75 percent of her savings — roughly $4,000 — to pay bills.
“That was the money I had saved to use for vacations or emergency funds,” she said. “I was going to buy a new camera. And then as soon as everything started going down, I had to put everything on hold, because I knew that I was going to end up having to pay rent with it eventually.”
Ms. Polizzi recently received $900 from Lost Wages Assistance, a short-term supplement from the federal government, and she expects one more payment from the program in the next few weeks.
In the meantime, she is making masks, lingerie, hats and jewelry and selling the items online at $25 to $200 apiece.
She has made about 60 sales. “Hopefully, I’ll be able to make it work and just pay all my bills through my art ventures,” she said.
Despite the challenging picture over all, a few workers have been able to find better-paying positions, securing shelter in the coronavirus storm.
Before the pandemic struck, Chloe Ezi was a lifeguard at a public aquatic center in Powder Springs, Ga. It was part-time work that paid $11 an hour, but she was able to bring in an extra $300 a week by teaching private swim lessons.
In March, Ms. Ezi was sent home during coronavirus lockdowns. Because she continued to be paid half her wages — about $75 a week — the pool operators told her that she was not eligible to file for unemployment benefits.
Ms. Ezi, 19, was called back to work in May, but because virus restrictions kept her from teaching private swim lessons, she was able to bring in only about $150 a week — barely enough to cover her $280 monthly car insurance bill, her $80 cellphone bill, and $100 monthly payments to Penn Foster College, where she is completing a dental assistant certificate program, plus groceries and other necessities.
“That’s not a lot to live off of,” Ms. Ezi said. “I was zeroing out my paycheck every month.”
To save money, Ms. Ezi lived with her boyfriend in his parents’ house.
“We’re all just a big family living in this house together,” she said. “It can get pretty stressful living with so many people like this.”
Tired of living in such close quarters, Ms. Ezi began looking for a job that would pay more. In August, she found a full-time position as a sales representative at a store that sells birding equipment, where she makes $13 an hour plus tips. She remains on the staff at the pool, where she still picks up an occasional shift.
Now she and her boyfriend can afford to rent a one-bedroom apartment in Smyrna, Ga. They moved in on Wednesday.
“My new job allowed us to finally get our own place,” she said. “I’m feeling pretty proud of myself right now.”