Fresh Blow To Teetering Economy From Expiring Jobless Benefits
Millions of financially-strapped Americans will face yet another hit to their pocketbooks this week as dilly-dallying among Congressional Republicans allowed for the expiration of enhanced jobless benefits triggered by the pandemic.
Their pain will also be a further drag on an already slumping economy whose recovery remains very much uncertain amid a sharp spike in U.S. Covid-19 deaths and infections.
“The scheduled termination of the Federal Pandemic Unemployment Compensation program at the end of July could generate a meaningful drag on household income,” wrote JP Morgan economist Daniel Silver in a research note.
“Benefit recipients have skewed more toward lower-wage workers lately and that many individuals already have started to exhaust regular benefit programs.”
The damage already done to the labor market from three months of sharply weakened economic activity cannot be understated. The official jobless rate of 11.1% is already the highest on records dating back to 1948, except for the preceding two months.
“The actual extent of unemployment is even higher,” writes ex-White House economist and Peterson Institute senior fellow in a research paper. That’s because the data include a “misclassification error” that fails to account for the additional 2 million workers who reported being “not at work for other reasons” as unemployed.
“Although the BLS properly adhered to its standard operating procedure of not making ad hoc adjustments, economists generally agree that most of this group should be classified as unemployed,” explains Furman.
“Doing so would raise the unemployment rate to 12.3%.”
Also, an unusually large number of people stopped looking for work in the past few months, meaning they no longer count as jobless in the official records.