WASHINGTON (AP) – The number of people seeking unemployment assistance rose to 965,000 last week, the highest number since late August and a sign that the resurgent virus has likely escalated layoffs.
The latest figures for unemployment claims, released by the Labor Department on Thursday, remain at levels never seen until the virus hit. Before the pandemic, there were typically about 225,000 filings weekly. They rose to nearly 7 million last spring after nationwide shutdowns took effect. Applications have fallen over the summer, but have been above 700,000 since September.
The rapid pace of layoffs coincides with an economy faltering as consumers travel, shop and eat out in the face of the rising viral caseloads. More than 4,300 deaths were reported on Tuesday, another record high. The closing of restaurants, bars, and other venues where people gather in California, New York, and other states have likely resulted in layoffs.
Some states and cities oppose closure, partly out of fear of the economic consequences, but with an increased risk of further contamination. Minnesota allowed in-person dining to resume this week. Michigan is ready to do the same. Some Kansas City bars and restaurants are extending their hours.
Economists say once coronavirus vaccines become more widely distributed, a broader recovery should occur in the second half of the year. The incoming Biden administration, along with a now fully democratically-led House and Senate, is also expected to push more bailout and spending measures that could accelerate growth.
Still, many analysts are also concerned that with millions of Americans still out of work and as many as one in six small businesses going out of business, people most affected by the downturn are unlikely to benefit from a recovery any time soon.
“While the outlook for the economy is positive later in 2021, the labor market recovery has taken a step backward,” said Nancy Vanden Houten, an economist at Oxford Economics, and we expect claims to remain high, with the risk emerged from last week’s levels. “
Last week’s aid applications may have been increased in part because government employment offices were closed during the holidays, forcing some unemployed people to wait until last week to apply. The addition of a federal unemployment benefit of $ 300 a week, as part of a rescue aid package introduced late last month, may also have encouraged more people to sign up, Vanden Houten said.
In addition to last week’s initial claims for unemployment assistance, the government said on Thursday that 5.3 million Americans still receive state unemployment benefits, up from 5.1 million in the previous week. It suggests that fewer people without work are finding a job.
About 11.6 million people received jobless assistance from two federal programs in the week ending December 26, the last period for which data is available. One of those programs offers extensive benefits to people who have depleted their state aid. The other provides benefits to the self-employed and indentured servants.
Those two programs ended at the end of December. They were extended late, to mid-March, in the $ 900 billion rescue aid package that Congress approved and President Donald Trump signed the law. That legislation also included $ 600 checks for most adults and a supplemental unemployment benefit of $ 300 per week. Congressional Democrats are in favor of raising checks to $ 2,000 and expanding federal aid beyond March, as is President-elect Joe Biden.
The weakness of the US labor market was made painfully clear in the December employment report released by the government last week. Employers are cutting jobs for the first time since April when the pandemic tightened its grip on consumers and businesses.
The figures also showed a highly uneven labor market: Last month’s losses were concentrated in restaurants, bars, hotels and entertainment venues – places that provide personalized services that some governments have limited or that consumers avoid. Education services, mainly colleges and universities, also reduced the workforce in December. Just like film and music studios.
However, most other major industries reported an increase in the number of jobs. Many economists had expected the job losses last spring to spread to more industries. While all sectors of the economy initially laid off workers, most have prevented deep job losses. Manufacturing, construction and professional services such as engineering and architecture, for example, all added jobs in December.
At the same time, many companies seem reluctant to significantly increase the workforce. A government report on Tuesday found that employers advertised fewer vacancies in November than in October. The decline, while small, was widespread in most industries. Even now, the country has nearly 10 million fewer jobs than before the pandemic plunged the economy into a deep recession nearly a year ago, after reclaiming only 56% of jobs lost in the spring.