Jobless claims rose last week as coronavirus surge threatens to undermine recovery
Economists expected 730,000 Americans to apply for jobless aid last week
The number of Americans applying for state unemployment benefits rose again last week as a surge in coronavirus cases across the country threatens to undermine the economy's recovery.
The latest jobless claims figures from the Labor Department, which cover the week ending Nov. 21, show that 778,000 workers sought aid last week, about four times the pre-crisis level. While it's well below the peak of nearly 7 million in late March, when states first implemented lockdown measures to curb the spread of COVID-19, it marks the second consecutive week of an increase in claims.
It's a slight uptick from last week's revised figure of 748,000 and well above the 730,000 new claims forecast by Refinitiv economists.
"Weekly unemployment insurance claims are moving in the wrong direction with the first back-to-back increases since July," said Robert Frick, corporate economist at Navy Federal Credit Union. "Together with a slower-than-expected drop in continuing claims, we're seeing the effects of rapidly-rising COVID-19 cases across the country."
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Close to 68 million Americans ‒ roughly 40% of the nation's labor force ‒ have applied for aid since the coronavirus lockdowns began in mid-March.
The number of people who are continuing to receive unemployment benefits fell to a little more than 6 million, a decline of 299,000 from the previous week.
While the decline suggests that employers are calling their workers back, it may represent laid-off Americans who have used up the maximum number of payments available through state unemployment programs (typically about six months) and are now receiving benefits through a separate federal program that extends the aid by 13 weeks. Congress created the extra federal benefits earlier this year with the passage of the CARES Act.
But those key federal jobless aid programs created in March are slated to expire at the end of the year, leaving about 12 million workers with no income on Dec. 26, according to a new study published by the Century Foundation, a nonprofit think tank.
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Up to 4.4 million workers are expected to exhaust their unemployment benefits before Dec. 26, with 3.5 million Americans using up the extended Pandemic Emergency Unemployment Compensation and 925,000 running out of the Pandemic Unemployment Assistance.
Job losses remain elevated and, as COVID-19 cases surge across the country, prompting state and local governments to implement new lockdown measures, economists are increasingly warning of a bleak winter.
“There hasn’t been a bigger need for it in a long, long time here,” Federal Reserve Chairman Jerome Powell said last week, his latest appeal to Congress and the White House regarding another stimulus package.