Delta Variant Wave affected US Economic Growth and Jobless Claims rose to 353,000

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On Thursday, US Labor Department reported that jobless claims increased up to 353,000 from 349,000 a week earlier. It marks the first time the number of Americans filing initial claims for jobless benefits rose in 5 weeks. However, the economy and job market are recovering rapidly from the coronavirus pandemic. The weekly count has decreased more or less steadily since topping 900,000 in early January. It helped by the rollout of COVID-19 vaccines that have encouraged businesses to reopen and has lured consumers out of their homes to restaurants, bars, and shops. But an increase of cases is linked to the highly infectious Delta variant has affected the rapid economic growth. A chief economist with Pantheon Macroeconomics, Ian Shepherdson said, “The downward trend in claims continues, despite the Covid-Delta wave”.

Shepherdson added, “It is supposedly because the bar to letting staff go is very high, given the tightness of the labor market. Firms can’t be sure they’ll be able to rehire people laid off now”. US job market has been rebounding with vigor since the pandemic paralyzed economic activity last year. US employers ripped at least 22 million jobs in March and April 2020. The US has since recovered 16.7 million jobs and employers have also added a rising number of jobs for 3 consecutive months, including a robust 943,000 in July. Job openings posted a record 10.1 million in June, faster than applicants are lining up to fill them. Some employers alleged their labor shortages on supplemental unemployment benefits from the federal government.

It includes $300 a week on top of regular state aid for discouraging some of the jobless from seeking work. Many states have withdrawn from the federal programs, which expire nationwide on 6^th September. Economists have pointed to other factors that kept workers out of the job market including difficulty finding or affording child care, fear of becoming Delta variant infected, and hope among some workers of finding a better job than they had before the pandemic. The lead economist at Oxford Economics, Nancy Vanden Houten said, “We expect jobless claims to remain on a downward path as the labor market continues to recover. But progress will be more fitful as claims get closer to pre-pandemic levels. We don’t expect the end of emergency benefits to lead to an immediate jump in employment”.