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The number of Americans applying for unemployment benefits unexpectedly increased last week, and some economists said that overdue federal unemployment benefits may drive this growth.
The US economic recovery is still on track, but the labor market shows that growth is slowing in the face of challenges ranging from the spread of the Delta variant of COVID-19 to more stingy unemployment benefits.
The US Department of Labor said on Thursday that the number of initial jobless claims increased by 11,000 last week, exceeding expectations, reaching 362,000. This is the third consecutive week that the number of people applying for unemployment benefits has increased for the first time and the highest reading since the beginning of August.
The state with the largest increase was California, where the number of first-time jobless claims last week increased by nearly 18,000 from the previous week.
Goldman Sachs economists believe that the expiration of federal unemployment benefits earlier this month may be a factor in increasing the number of Californians applying for state unemployment benefits.
Goldman Sachs said in a report to clients: “The increase in the number of first-time jobless claims is again driven by the increase in California, which may be related to the transition from expired federal unemployment insurance benefits to other benefit plans.”
In the week ending September 18, the number of Americans currently receiving unemployment benefits (a measure called continuous claims) fell by 18,000.
The health of the labor market is a key barometer of the world’s largest economy.
The U.S. job market has recovered a lot of losses from the lockdown last year, but there are still 5.3 million jobs that cannot be restored to pre-pandemic levels-and this gap does not take into account the growth of the labor force or the economy since then .
Although the economy is steadily adding jobs every month this year, due to the increasing infection rate of the highly contagious Coronavirus Delta virus and the slowing down of hiring in customer-facing industries, August created a disappointing 235,000 employment position.
On Friday, the US Department of Labor will release the much-watched September employment report.
Federal Reserve Chairman Jerome Powell has said that if this is a necessary condition for Americans to return to work, he and his policymakers will work to maintain their cheap monetary policy.
But the current disconnect between the number of unemployed in the US labor market and the record number of job vacancies has left employers scrambling to fill job vacancies. In July, about 10.9 million jobs in the United States were begging.
And only when employers actually add workers to their payroll will they create jobs.
This week, Powell told lawmakers on Capitol Hill that “Pandemic-related factors, such as the need for care and continued fear of the virus, seem to be dragging down employment growth.”
It is inflation that complicates the situation. The Federal Reserve has a dual mission to maximize employment in the economy while keeping the inflation rate within the long-term target of 2%.
As companies got rid of the virus restrictions, caused bottlenecks in raw materials and labor, and increased transportation costs, the inflation trend this year was much higher than the target.
But Powell has repeatedly stated that he and his policymakers believe that inflation is a temporary by-product of the economic reopening, and that prices will eventually slow down.
In another report on Thursday, the U.S. Department of Commerce stated that the U.S. economy grew 6.7% year-on-year in the second quarter. The revised figure is slightly higher than the previous estimate.
However, many economists expect growth in the third quarter of this year to slow down, mainly due to the spread of the Delta variable.
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