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Data: U.S. Department of Labor; Chart: Andrew Witherspoon/Axios

The exponential growth of claims for the Pandemic Emergency Unemployment Compensation (PEUC) program are worrying economists and previewing a weakening U.S. labor market in the coming months.

What's happening: The PEUC is a CARES Act program for unemployed Americans who have exhausted the 26 weeks of unemployment benefits they get from their state. It has grown from 27,000 people on April 11 to 1.3 million as of Aug. 1.

Why it matters: The number of PEUC recipients has been over 1 million for four straight weeks and has increased each week. Worse, it's likely made up of people who lost their jobs before the wave of business closures that hit the U.S. in mid-March.

What we're hearing: "The real tsunami is coming," Mark Zandi, chief economist at Moody's Analytics, tells Axios. "My guess is at this point hiring in the industries that have been hit hard is going to abate."

  • "That leaves us with very little job creation in the rest of the economy but with still high levels of layoffs."
  • "I think the labor market is set to start weakening again here, particularly if Congress and the administration don’t get it together and pass more support."

What's next: "It becomes a longer tale of recovery with more labor market friction," says Julia Coronado, president of MacroPolicy Perspectives.

  • "You’re starting to see unemployment spells last a long time. The longer you’re out of the labor force and disconnected from your prior employer, the harder it is to reconnect."

The bottom line: "The recovery would be faster and more robust with the fiscal stimulus and there’s a lot more risk of a protracted, slower recovery and even some backtracking without it."

Go deeper

How consumer spending slowdown affected U.S. businesses

Data: U.S. Census Bureau; Chart: Naema Ahmed/Axios

The consumer-spending pullback whacked businesses that were already struggling to recover from the initial hit from the pandemic, data from the U.S. Census Bureau show.

Why it matters: This month’s lockdowns (or people curbing their own activity for safety reasons) will be a bigger setback for these same shops in the weeks to come.

Janet Yellen is back

Photo illustration: Sarah Grillo/Axios. Photo: Hannelore Foerster/Getty Images

A face familiar to Wall Street is back as a central player that this time will need to steer the country out of a deep economic crisis.

Driving the news: President-elect Joe Biden is preparing to nominate former Fed chair Janet Yellen to be Treasury secretary.

Mike Allen, author of AM
37 mins ago - Politics & Policy

Charles Koch: "I screwed up"

In his first on-camera interview in four years, Charles Koch told "Axios on HBO" that he "screwed up by being partisan," rather than approaching his network's big-spending political action in a more nonpartisan way.

Why it matters: Koch — chairman and CEO of Koch Industries, which Forbes yesterday designated as America's largest private company — has been the left's favorite face of big-spending political action.