Although still extremely high, the number of Americans applying for jobless benefits* fell for the tenth week in a row. At the same time, the number of COVID-19 cases has been rising in many states, spurring concern over a second wave of the virus.

The negative impact of the pandemic on the U.S. job market is clear. After averaging 218,000 in 2019, the number of seasonally adjusted initial unemployment insurance claims spiked to 3.3 million for the week ending March 21, 2020. The number of claims more than doubled the next week to 6.9 million, but has fallen to 1.5 million as of June 6.

The average number of Americans receiving unemployment insurance benefits during any one week in 2019 was 1.7 million compared to 17.2 million during the pandemic. The number of beneficiaries peaked the week of May 9 at 24.9 million, but has since come down to 20.9 million. The next highest number of beneficiaries was 6.6 million in May 2009 during the Great Recession.

So while there has been some improvement in the historically high numbers, there is a long way to go before the labour market of our largest trading partner will be back to where it was before COVID-19.

Complicating the recovery is the potential for sustained spikes in virus levels as business and social activities resume. Added to this is what many have described as a “grim” economic outlook from the U.S. Federal Reserve that forecasts a 6.5 per cent decline in U.S. GDP this year.

In a statement released June 10, the Federal Reserve noted that “the ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”

*Unemployment insurance in the U.S. is a joint state-federal program that provides cash benefits to eligible workers. Each state administers a separate unemployment insurance program, but all states follow the same guidelines established by federal law.