Unemployment up, GDP down
U.S. economic activity dropped by a third, as unemployment claims rose slightly
The Cheesecake Factory at the John Hancock Center in Chicago closed in March and is now serving only takeout and delivery. (Shutterstock)
By Ted Cox
Weekly unemployment claims rose again in a report released Thursday, as quarterly statistics suggested that the U.S. economy contracted by almost a third over the last three months.
The stunning economic news Thursday was that the U.S. Gross Domestic Product — considered “the broadest measure of goods and services produced,” according to The New York Times — fell 9.5 percent in the second quarter of the year from April through June. GDP had been on a steady increase since 2009, rising from the depths of the Great Depression to top $19 trillion on an annual basis at the end of last year. Yet after a slight decline in the first quarter, driven by nationwide efforts to shut down the economy to mitigate the spread of the COVID-19 pandemic, the economy cratered, dropping to an annual estimate of $17.2 trillion. The second-quarter decline translated to a 32.9 percent drop over the course of the year.
“The collapse was unprecedented in its speed and breathtaking in its severity,” the Times reported. “The only possible comparisons in modern American history came during the Great Depression and the demobilization after World War II, both of which occurred before the advent of modern economic statistics.”
The Trump administration had hoped for what economists called a “V-shaped” recovery, with the economy springing back from what was for the most part a self-imposed shutdown, but Trump’s refusal to take responsibility and utter inability to contain the pandemic have undercut a business rebound as cases have spiked in Sun Belt states from the Carolinas and Florida through Texas and Arizona to California. That was borne out Thursday as the U.S. Labor Department reported the second straight week of increased weekly claims for unemployment benefits.
The department recorded 1.4 million newly filed claims for unemployment last week, up 12,000 from last week’s figures, which were revised up by 6,000. Last week was the first time weekly claims had risen nationally since a record 6.9 million idled workers filed for benefits the last full week in March.
The news was far better in Illinois, where new claims dropped 4,000 to 32,000 last week from 36,000 the week before. Claims for expanded federal benefits for independent contractors, freelancers, and so-called gig workers not eligible for conventional unemployment dropped precipitously, from a record 74,000 the week before to just 6,000 last week.
It’s unclear how much of that decline was due to the attention devoted to a nationwide fraud network afflicting the Pandemic Unemployment Assistance program. Gov. Pritzker was one of those calling attention to the scam, in which some people received correspondence from the Illinois Department of Employment Security or even debit cards while remaining employed and never filing for benefits.
“The national program was poorly designed and susceptible to fraud,” Pritzker said, calling it a “systemwide failure.” The Illinois Department of Employment Security has issued a news release on the fraud, stating it is “aggressively cracking down on this fraud network,” along with federal agencies, and asking anyone who’s received such an unauthorized card or letter to report it. Pritzker, meanwhile, warned that those who’d received anything from IDES without filing for benefits had most likely had their identities stolen and should closely monitor their credit reports.
Nationally, the Labor Department reported: “The advance seasonally adjusted insured unemployment rate was 11.6 percent for the week ending July 18, an increase of 0.5 percentage point from the previous week's unrevised rate,” the same increase over the 11.1 percent U.S. unemployment rate recorded by the U.S. Bureau of Labor Statistics in June.
“The total number of people claiming benefits in all programs for the week ending July 11 was 30,202,498, a decrease of 1,601,699 from the previous week,” the department reported. “There were 1,722,040 persons claiming benefits in all programs in the comparable week in 2019.”