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Thursday brought two big numbers for the American economy: Another significant rise in inflation, and the lowest level of weekly jobless claims since the onset of the pandemic.

They show the paradox that is the current economic recovery. Goods are still getting pricier — although inflation shows signs of cooling down soon — and fewer people are losing work and remaining on unemployment. The White House says its recovery plan is working.

In a statement, Brian Deese, the director of the National Economic Council, said the recent economic data “reinforce that US fiscal policy and vaccination progress are positioning the economy for growth and job creation.” Deese also noted that the jobless claims come “as independent analysts project that economic growth in the United States will outpace growth for our peer nations and reach the fastest pace in nearly four decades.”

On Wednesday, a day ahead of the jobless data release, Heidi Shierholz, the director of policy at the left-leaning Economic Policy Institute and an Obama Labor Department veteran, broadly agreed with Deese.

“Things are getting back to normal,” Shierholz told Insider. “I think the key is we don’t want to make drastic policy changes at this point.” When it comes to relief and recovery measures for this recession, “we are doing it so right,” she said. But she warned that could still change.

Shierholz said she expects to see a quick bounceback and strong recovery, but changing course could threaten that. “If we start pulling back with those measures now, we’re going to just cut that off at the knees,” she said. 

One thing that could weaken the recovery is the move to prematurely end federal unemployment benefits in 25 states, where GOP governors cited labor shortages as a reason to pull the plug on benefits and get workers back. Both the jobless claims and May’s jobs report show the recovery happening even with enhanced benefits. As Insider’s Ayelet Sheffey reported, payrolls saw a strong increase even as benefits remained intact.

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The decision to prematurely end unemployment benefits will impact about 4 million workers, according to an estimate from Andrew Stettner at the liberal-leaning Century Foundation. Some of those workers, who receive benefits through federal programs that expanded both the eligibility and duration of benefits, will lose all benefits — not just the additional $300 weekly.

Some advocates and politicians have argued that the Labor Department is legally required to continue to pay out Pandemic Unemployment Assistance (PUA), which expanded eligibility for benefits to gig workers, among others. However, the Department of Labor has concluded it’s probably unable to pay those out.

The White House has signaled acceptance for benefits ending. Last week, White House Press Secretary Jen Psaki said the GOP-led states that are cutting off benefits “have every right” to do so.

Shierholz said many people that have been unable to find work or are unable to return due to health concerns. Cutting off benefits would also cut off the money those people have been spending …read more

Source:: Business Insider

      

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