Home / Government / Plight of the jobless worries economists

Plight of the jobless worries economists

Washington (AP) — Unemployment claims are up and manufacturing growth is slowing, according to reports issued Thursday.

Meanwhile, 1.3 million people are without federal jobless benefits as Congress prepares to adjourn for a weeklong Independence Day recess without passing an extension. That number could grow to 3.3 million by the end of the month if lawmakers can’t resolve the issue when they return.

All of this worries economists. As jobless claims grow and benefits shrink, Americans have less money to spend and the economy cannot grow fast enough to create new jobs. Some economists are revising their forecasts for growth in the third quarter. Others said they are afraid the country is on the verge of falling back into a recession.

“We find the level and direction in jobless claims somewhat troubling and the increase is likely to feed double-dip fears,” according to a note to clients attributed to John Ryding, an economist at RDQ Economics.

New claims for unemployment benefits jumped by 13,000 to a seasonally adjusted 472,000, the Labor Department reported Thursday. The four-week average, which smoothes fluctuations, rose to 466,500, its highest level since March.

Claims have remained stuck above 450,000 since the beginning of the year. Requests for unemployment benefits dropped steadily last year after reaching a peak of 651,000 in March 2009. Economists said they will feel more confident about sustained job growth when initial claims fall below 425,000.

Adding to that is the growing number of people who stand to lose government support while they search for work.

For the third time in as many weeks, Senate Republicans blocked a bill Wednesday night that would have continued unemployment checks to people who have been laid off for long stretches. Regardless of any House vote on a similar measure Thursday, the Senate’s action renders a vote a futile gesture as Congress prepares to depart Washington for its holiday recess.

During the recession, Congress added up to 73 weeks of extra benefits on top of the 26 weeks typically provided by states. Democrats in the House and Senate want them extended through November.

Republicans want the $34 billion cost of the bill to be paid for with money remaining from last year’s stimulus package. Democrats argue that it is emergency spending and should be added to the deficit.

Some economists said they may revise their forecasts for growth in the third quarter if the benefits are not extended.

“People whose benefits are going to run out will simply not have the spending power necessary to help drive growth,” said Dan Greenhaus, chief economic strategist at Miller Tabak.

Separately, the Institute for Supply Management, an industry trade group, reported its manufacturing index slipped in June. But it is still at a level that suggests growth in the industrial sector, which has helped drive the economic recovery.

Surveys released Thursday in China showed a slowdown in factories’ growth as exports faltered and analysts worry that cutbacks in government lending will cool the economy’s rapid rise. Reports from Markit Economics also indicated that manufacturing sector growth in India, South Korea, Australia and Taiwan was slowing.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Leave a Reply

Your email address will not be published. Required fields are marked *