WASHINGTON (AP) – The number of Americans seeking unemployment benefits rose to 770,000 last week, a sign that layoffs remain high even as much of the U.S. economy is steadily recovering from the coronavirus recession.
Thursday’s report from the Labor Department found that the number of unemployed increased from 725,000 the week before. The numbers have fallen sharply since the depths of the recession last spring, but still show employers in some industries are continuing to lay off workers. Before the pandemic hit, there were no more than 700,000 applications for unemployment assistance in a single week.
The four-week average number of claims, smoothing out weekly variations, fell to 746,000, the lowest since late November.
In total, 4.1 million people continue to collect traditional state unemployment benefits, 18,000 fewer than the week before. Including separate federal programs designed to help workers displaced by the health crisis, 18.2 million Americans received some form of jobless aid in the week of Feb. 27, 1.9 million fewer than the week before.
The ongoing layoffs are taking place even as the overall labor market has shown a solid improvement. Last month, US employers added a whopping 379,000 jobs, the highest number since October and a sign that the economy is picking up as consumers are spending more and states and cities are easing business restrictions.
As vaccinations accelerate, hopes are growing that Americans will increasingly travel, shop, eat out, and spend freely after a year of virus-induced reluctance.
President Joe Biden’s $ 1.9 trillion aid package is also expected to help accelerate growth, especially as most adults receive $ 1,400 stimulus vouchers this week that should fuel more spending. An extension of $ 300 weekly unemployment benefits through early September will also provide support, along with money for vaccines and treatments, reopening schools, state and local governments, and ailing industries ranging from airlines to concert halls.
“Labor market tensions are ongoing, but we expect applications (for unemployment assistance) to start to decline as restrictions are lifted and more normal activities resume,” said Rubeela Farooqi, chief economist in the US at High Frequency Economics, in a research note. “When companies are back to full throttle, job and income prospects will improve and, combined with fiscal support, will give the economy a powerful boost.”
At the same time, the country is still about 9.5 million fewer than the number of jobs it had in February 2020. And Federal Reserve Chairman Jerome Powell suggested Wednesday after the Fed’s last policy meeting that the overall economic outlook remained cloudy.
“The state of the economy in two or three years is highly uncertain,” Powell said at a press conference after the Fed indicated it expects the key interest rate to remain close to zero through 2023, despite some solid economic gains and concerns about the rising inflationary pressures. .
According to most barometers, activity in the huge and hard-hit service sector of the economy is still far from normal. For example, data company Womply said that early last week, 63% of cinemas, galleries and other entertainment venues were closed. So did 39% of bars, 32% of gyms and other sports and recreation businesses and 30% of restaurants.