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National jobless claims dropped last week, but U.S. economy still short 10 million workers

Economists say latest numbers show some recovery is happening, but the economy remains in “recession territory.”

People wait to speak with representatives from the Oklahoma Employment Security Commission about unemployment claims Thursday, July 9, 2020, in Midwest City, Okla. The Labor Department reported Thursday that weekly claims had dipped below 1 million nationwide.
Sue Ogrocki, Associated Press

SALT LAKE CITY — Weekly unemployment claims dropped to 963,000 nationally last week, down from nearly 1.2 million the previous week, the U.S. Department of Labor reported Thursday.

Although fewer claims reflects fewer layoffs, last week’s numbers “still far exceeds the pre-pandemic weekly record of just under 700,000,” according to The Associated Press.

It’s the first time that weekly jobless claims have dropped below one million since the pandemic-induced economic crash in March.

An additional 489,000 workers who don’t qualify for regular state unemployment insurance — like independent contractors and those who are self-employed — applied for federal assistance from the Pandemic Unemployment Assistance program, The New York Times reported.

Economic analysis predicted weekly claims to be down, but only to around 1.1 million, according to Forbes. Thursday’s lower numbers could mean there is some economic recover happening.

“The direction is encouraging,” said Michelle Meyer, head of U.S. economics at Bank of America Corp., to Bloomberg.

Meyer said labor market may be catching up to other more positive indicators, “but the level is still high, which means there’s more work to be done. We’re five months after the initial shock in March, and claims at 963,000 are still very much in recessionary territory.”

Joblessness reached a pinnacle when nearly 7 million Americans filed unemployment claims during the last week of March.

“Continuing claims — the total number of Americans claiming ongoing benefits in state programs — also decreased to 15.5 million in the week ended Aug. 1, the lowest since early April. But they’re still far above historical levels going back to the 1960s,” Bloomberg reported.

Last week, the U.S. Bureau of Labor Statistics announced that 1.8 million jobs were added to the economy in July. But that was fewer than the 4.8 million jobs gained in June, possibly showing employment leveling off as coronavirus cases climbed this summer.

The national unemployment rate dropped nearly a percentage point to 10.2% in July, according to the report. Three months of declining unemployment seems to show some economic growth, but the American economy is still short 10 million jobs compared to February, when joblessness was at 3.5%.

“Economist said the longer the pandemic drags down the economy, the more job losses will become permanent — and the more likely people filing weekly claims are not going to bounce back and be rehired, as many were earlier in the pandemic,” The Washington Post reported.