This statement was published in response to the October 29, 2020 release of jobs numbers by the Bureau of Labor Statistics. For the most up-to-date data please visit TCF’s comprehensive UI data dashboard here.
On Q3 GDP report, from Jeff Madrick, senior fellow at The Century Foundation, director of the Bernard L. Schwartz Rediscovering Government Initiative, best-selling author and former NYT economics columnist:
For the last four years, the Trump administration has gaslit the American people. And so it is now, with the final economic report of his first term, that he once again spins at best mediocre facts and data into purported ‘record-setting’ achievements. To be clear: these numbers cannot be interpreted in isolation. The contraction in GDP growth in Q2 was unprecedented, and the Q3 growth numbers—based on this lower baseline—in no way make up for the hole we are in.
Despite the Trump administration’s grandiose claims about the GDP report, the fact is that the data are a statistical oddity, not a sign of substantial strength. Economic growth is slowing. When you’re at the bottom of a valley, and you climb half-way up and stop—that is nothing to celebrate.
The Commerce Department reported that GDP rose by an annualized 33.1 percent between July and September, or 7.4 percent for the quarter. Yet total income (or GDP), even when taking into account the new data, is still only two-thirds of what it was in 2020. More importantly, we have created only half as many jobs as have been lost. We are still down nearly 11 million jobs from pre-pandemic levels.
And still, this data does not tell us much about what is coming next. In lockstep with the unchecked spread of the virus, economic growth has begun to slow as well. Hours worked in Q3 have been rising much more slowly than in the spring and summer. Growth in personal consumption is also decelerating. And much of the gain in GDP in the third quarter came from the overhang of federal stimulus spending, which has been prematurely cut off. Without further stimulus, the winter may indeed be very painful.
The enormous hole we continue to struggle to climb out—in contrast to what this data at first glance suggests—is the direct result of the Trump administration’s failure to mitigate the spread of COVID-19. Don’t be fooled: the Trump administration has surrendered to the raging third wave of the pandemic. And with it, they have thrown our economy into further despair.”
On DOL’s unemployment claims report for the week ending October 24, TCF senior fellow Andrew Stettner, one of the nation’s leading experts on unemployment insurance (UI):
Today’s Labor Department report provides a harsh reality check on a day when the government released appearingly strong GDP growth numbers for the third quarter. Despite notable recovery gains that were aided in large part by federal stimulus funds, unemployment still remains an urgent and unsolved crisis that will only deepen in the coming weeks and months. Regardless of how the Trump administration attempts to spin the GDP report, this week’s unemployment data—showing that more than 22.5 million people, or roughly 1/7th of the U.S. workforce, continue to rely on unemployment benefits to survive—paints a much different, and more realistic, picture of the economy.
Now more than seven months into the pandemic, more than 1 million new applications for unemployment benefits were filed during the week ending October 24 (732,000 state and 360,000 PUA). Reports indicate that many of these new layoffs are coming in accommodations and food services—just the kind of jobs that will continue to be at risk as consumers shrink from purchasing services that put them at risk from the out of control spread of COVID-19.
Alarmingly, there has been little attention paid to the fact that millions of Americans will soon run out of their unemployment benefits because they have not been called back to work or can’t find a job. Last week, the number of workers on PEUC extended benefits increased by 387,000 to 3.69 million, the highest level yet and more than truth the level one month ago. A shocking three million workers ran out of their state unemployment benefits in September (which are typically capped at 26 weeks), and if trends continue another 6 million will exhaust in October and eventually come onto PUA.
These exhaustions of benefits, more than an underlying improvement in the job market, explain much of the overall drop in the total number of workers collecting unemployment (continued claims for state unemployment benefits dropped by 662,000 last week, and are down 36 percent over the past month). Due to administrative issues, the take-up between state benefits and PEUC extensions has been slow, with states like Texas and Washington only bringing 6 percent of state exhausted claimants into extension. Claims for PUA benefits have been relatively steady after volatility that was likely caused by double counting and fraudulent activity, coming in at 10.3 million in today’s report (up 170,000 from last week). All told there are a total of 21.4 million ongoing claims for jobless benefits in these three main programs (not including 1.1 million new claims), compared to 1.97 million at the start of the pandemic and 2.52 million at the start of the Trump administration.
Unless they are able to find a job, most of these workers are staring at a hard cliff the day after Christmas, when CARES Act benefits like PEUC and PUA expire. While some may qualify for the 1970s-era Extended Benefits program (now covering just 400,000 of the longest unemployed), this program will only be accessible in states with the highest unemployment rates. Americans should not stand for a situation in which millions of jobless workers are cut off from aid. Extending this aid must be a priority when Congress comes back to work after the election.