Unemployment in the US may fall in July despite recovery from the virus

The increase in covid-19 in the United States forced the closing of store and restaurant doors, but the unemployment rate is expected to decline moderately in July, while the White House and Congress negotiate a new aid plan.

The figure will be released on Friday and unemployment could fall to 10.5% from 11.1% in June, according to analysts.

But some economists warn that profit could be much lower and could fall in August, bad news for Republican President Donald Trump, who still lags behind in the polls for the November 3 election against Democrat Joe Biden.

Trump promised a “large number” on Fox News on Wednesday, without giving further details.

“After a strong recovery in May and June, the recovery in the labor market probably stopped in July,” anticipated Lydia Boussour, an analyst at Oxford Economics.

Due to the multiplication of secret cases from 19 countries, many states, such as California, Texas and Florida, had to close stores that had reopened a few weeks earlier.

This significantly reduced job creation in the private sector in July: only 167,000 jobs were created, up from 2.4 million in the previous month, according to a survey by business services firm ADP.

– “Mixed July” –

As a result, new unemployment claims increased by up to two weeks in late July, when they had only fallen since the start of the pandemic.

But they started to fall again last week.

The July data “is confusing,” admitted Grant Thornton’s Diane Swonk. “Job vacancies continued to increase, but at a slower rate than that observed in May and June”, with a difference between states linked to the increase or not of coveted cases 19, he added.

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The south and west of the country, where the pandemic resurfaced, suffered a deterioration in the labor market. But in the height of summer, tourists flock to other parts of the country, “sometimes overflowing with visitors”, especially in the parks, he said.

The unemployed are now expected to tighten their belts, as of July 31, the aid of US $ 600 per week granted by the federal government since the beginning of the crisis.

In the United States, however, unemployment benefits are paid, depending on the state, for a maximum period of three to six months, and the value ranges from $ 235 to $ 823 per week.

– Agreement or decree? –

To prevent millions of families from falling into poverty and continuing to consume to operate the American growth mechanism, the White House and Congress are trying to agree on an extension of aid.

For more than two weeks, they have been negotiating a vast plan to support the economy. But with less than three months to go to the presidential election, discussions are tense.

And the amount of this aid is one of the major points of discussion.

For some Republicans, paying $ 600 a week discourages unemployed people from looking for work, so they propose to cut it to $ 200. The White House is negotiating a higher rate, around $ 400, but Democrats want to keep 600.

Trump said he would decide by decree to reduce payroll taxes, the eviction moratorium, the extent of unemployment benefits and the payment of student debts.

The president could sign this decree on Friday afternoon or Saturday morning.

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In total, 32 million people received this $ 600 assistance in mid-July, alone or in addition to the unemployment benefit to which they were entitled. In the same period last year, only 1.7 million people were receiving assistance.

Unemployment in the United States increased from 3.5% in February, its lowest level in 50 years, to 14.7% in April, the highest in 80 years and an increase never seen in just two months. Since then, it has declined a little each month, even surprising economists, who estimated it would reach 20%.

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