The coronavirus outbreaks in big states like California, Texas, and Florida—the nation’s three most populated states—are already starting to pull the economic recovery backwards.
On Thursday we learned 1.4 million Americans filed initial unemployment claims in the week ending July 18. That’s up from 1.3 million the week prior, marking the first time in four months that new unemployment claims have increased.
This also marks 18 straight weeks that initial unemployment claims have topped 1 million—something that had never occurred before March 2020. The old record of 695,000 claims from the week of October, 2 1982 had stood for almost four decades.
The uptick in unemployment claims over comes after claims had fallen every week since the peak of 6.9 million, for the week ending March 28. It also could be the manifestation of what some economists have been predicting: that soaring COVID-19 cases in the South, West, and Midwest could pull the economy back into recession or contraction.
“The virus is doing significant economic damage. States [with increasing cases] are reversing and pausing. Consumers and businesses there are more cautious and not spending as much,” says Mark Zandi, Moody’s Analytics Chief Economist.
That is reflected in the U.S. Department of Labor’s claims data. Florida, which reported a record high 173 new deaths from COVID-19 on Thursday, also led the nation in the week ending July 11 with 65,890 new unemployment claims. It was followed by Georgia (+33,292) and California (+20,123). Those states are also among the places where COVID-19 cases are swinging upwards.
But this uptick pales in comparison to what the economy experienced in March when it went from 282,000 weekly claims to 6.9 million in just a two week period. And there is reason for optimism: The total number of Americans receiving unemployment benefits fell from 17.3 million to 16.2 million. However, that figure runs one week behind new claims data, and very likely could go up again next week.
Nevada still has the highest number of workers collecting unemployment benefits at 21.3%. It is followed by Hawaii (20.7%) and Georgia (18%).
