WASHINGTON — The number of laid-off workers seeking U.S. unemployment aid barely fell last week, and the reopening of small businesses has leveled off — evidence that the job market's gains may have stalled just as a surge in coronavirus cases is endangering an economic recovery.
The government also reported Thursday that the economy contracted at a 5% annual rate in the first three months of the year, a further sign of the damage being inflicted by the viral pandemic. The economy is expected to shrink at a roughly 30% rate in the current quarter. That would be the worst quarterly contraction, by far, since record-keeping began in 1948. Economists do expect a snapback in the second half of the year, though not enough to reverse all the damage.
Last week, the number of people applying for jobless benefits declined slightly to 1.48 million. It was the 12th straight weekly drop. An additional 700,000 people applied through a program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.
Combining those figures, overall applications for jobless aid have edged down just 3% in the past two weeks — a much slower pace than in late April and May.
“There has been no real decline in weekly claims the past two weeks,” said Julia Pollak, a labor economist at ZipRecruiter. “There has also been no real increase in job openings. What seemed like encouraging signs of recovery in May largely stalled in June.”
A separate government report Thursday said orders for durable goods unexpectedly jumped nearly 16% in May, reflecting a rebound in some business activity. Still, the pace of orders and shipments remains far below pre-pandemic levels. And excluding the volatile transportation category, so-called core orders rose only modestly, reflecting still-sluggish business investment.
The virus is once again squeezing companies across the economy.
Disney is postponing the scheduled mid-July reopening of its Southern California theme parks until it receives guidelines from the state. Macy’s is cutting nearly 4,000 corporate jobs — roughly 3% of its workforce — in response to financial strain caused by the virus.
Apple announced late Wednesday that it would re-close seven of its stores in the Houston area, which is suffering a spike in cases. Last week, it had said would re-close 11 other stores in four states. And the parent company of Chuck E. Cheese restaurants will seek Chapter 11 bankruptcy protection, in part because of the restaurants it has been forced to close as a result of the pandemic.
Larry Kudlow, President Donald Trump's top economic adviser, asserted Thursday on Fox Business that the economy is rebounding quickly.
“I think the strong ‘V’ recovery is right still there,” Kudlow said, referring to the shape of a sharp rebound on a chart.
Most private economists, though, foresee a much more tepid recovery. And the latest economic figures coincide with a sudden resurgence of COVID-19 cases in the United States, especially in the South and West, that is threatening to derail the nascent economic rebound. On Wednesday, the nation set a high for new confirmed coronavirus cases. Many states are establishing their own new peaks for confirmed daily infections, including Arizona, California, Mississippi, Nevada, Texas and Oklahoma. Cases of coronavirus have also jumped in Florida and Georgia.
The number of infections is thought to be far higher still because many people have not been tested, and studies suggest that people can be infected with the virus without feeling sick.