Chris Stein and Heather Scott
Thu, 31 December 2020
Despite a drop in weekly jobless claims, the US economy is far from healed after a year in which tens of millions of people lost their jobs due to the coronavirus pandemic, many of whom remain out of work.
New filings for unemployment benefits last week dropped below 800,000 for the first time in a month, the Labor Department reported Thursday, but experts say that is more likely a statistical fluke related to the holidays and political maneuvers in Washington, rather than a sign the economy is finally on track for a sustained recovery.
As the United States continues to weather the world's largest coronavirus outbreak even as vaccines are finally being deployed, analysts see more layoffs on the horizon, at least in the early weeks of 2021.
"While prospects for the economy later in 2021 are upbeat, the economy and labor market will have to navigate some difficult terrain between now and then," Nancy Vanden Houten of Oxford Economics said.
New initial jobless claims slipped to 787,000 for the week ended December 26, a drop of 19,000 from the prior week, the Labor Department said.
Another 308,262 people filed new claims for Pandemic Unemployment Assistance (PUA), one of the programs available to jobless workers who would not normally be eligible for benefits.
That means the total new applications remain above one million long after the business closures ordered in March to halt the spread of Covid-19 turned the economy upside down.
Those business closures sent the unemployment rate spiking to 14.7 percent in April, but it has since declined, falling to 6.7 percent in November as companies modified or restarted operations even as the virus remained rife.
Nonetheless, the weekly filings for unemployment aid have remained above the worst single week of the 2008-2010 global financial crisis, and 19.6 million people were receiving jobless benefits under all government programs as of the week ended December 12, according to the Labor Department.
WATCH: The impact of covid surge on jobless claims
Covid-19 cases also are hitting new record levels in parts of the country, prompting local governments to order renewed business restrictions, meaning another jump in claim filings could be waiting in the new year.
Industries like travel, hotels, restaurants and entertainment have been devastated.
Grant Thornton chief economist Diane Swonk tweeted that she is "worried about a jump in claims post holiday as those who delayed reup and containment measures by states intensify with post holiday surge."
In addition to the holiday impact, applications also could have been held down by legislative confusion in Washington over the fate of PUA and other special pandemic aid due to expire before the end of the year.
Congress finally approved both, but President Donald Trump did not sign the new relief package into law until the day after some programs expired on December 26.
"We think that holiday noise and uncertainty about extensions of benefits may have held down claims last week," Oxford's Vanden Houten said.
"The risk is for a rise in claims in the weeks ahead now that emergency programs have been extended and an additional $300 in weekly benefits is being provided" by Congress.
New filings for unemployment benefits last week dropped below 800,000 for the first time in a month, the Labor Department reported Thursday, but experts say that is more likely a statistical fluke related to the holidays and political maneuvers in Washington, rather than a sign the economy is finally on track for a sustained recovery.
As the United States continues to weather the world's largest coronavirus outbreak even as vaccines are finally being deployed, analysts see more layoffs on the horizon, at least in the early weeks of 2021.
"While prospects for the economy later in 2021 are upbeat, the economy and labor market will have to navigate some difficult terrain between now and then," Nancy Vanden Houten of Oxford Economics said.
New initial jobless claims slipped to 787,000 for the week ended December 26, a drop of 19,000 from the prior week, the Labor Department said.
Another 308,262 people filed new claims for Pandemic Unemployment Assistance (PUA), one of the programs available to jobless workers who would not normally be eligible for benefits.
That means the total new applications remain above one million long after the business closures ordered in March to halt the spread of Covid-19 turned the economy upside down.
Those business closures sent the unemployment rate spiking to 14.7 percent in April, but it has since declined, falling to 6.7 percent in November as companies modified or restarted operations even as the virus remained rife.
Nonetheless, the weekly filings for unemployment aid have remained above the worst single week of the 2008-2010 global financial crisis, and 19.6 million people were receiving jobless benefits under all government programs as of the week ended December 12, according to the Labor Department.
WATCH: The impact of covid surge on jobless claims
Covid-19 cases also are hitting new record levels in parts of the country, prompting local governments to order renewed business restrictions, meaning another jump in claim filings could be waiting in the new year.
Industries like travel, hotels, restaurants and entertainment have been devastated.
Grant Thornton chief economist Diane Swonk tweeted that she is "worried about a jump in claims post holiday as those who delayed reup and containment measures by states intensify with post holiday surge."
In addition to the holiday impact, applications also could have been held down by legislative confusion in Washington over the fate of PUA and other special pandemic aid due to expire before the end of the year.
Congress finally approved both, but President Donald Trump did not sign the new relief package into law until the day after some programs expired on December 26.
"We think that holiday noise and uncertainty about extensions of benefits may have held down claims last week," Oxford's Vanden Houten said.
"The risk is for a rise in claims in the weeks ahead now that emergency programs have been extended and an additional $300 in weekly benefits is being provided" by Congress.
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