U.S. states saw slightly fewer Americans file for new jobless claims last week as during the prior week, as spiking COVID-19 cases and new restrictions drove still-more individuals out of work.
The Department of Labor released its weekly report on new jobless claims Wednesday morning at 8:30 a.m. ET, or a day earlier than usual due to the Christmas holiday. Here were the main results in the report, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Dec. 19: 803,000 vs. 880,000 expected and a revised 892,000 during prior week
Continuing claims, week ended Dec. 12: 5.337 million vs. 5.560 million expected and a revised 5.507 million during prior week
Though initial unemployment claims improved more than anticipated last week, claims are still coming in at historically elevated levels. New jobless claims have now held above the 800,000 level for three consecutive weeks, following a stretch of nearly two months of new claims below that level. And while new jobless claims have decreased significantly from the pandemic-era high of 6.9 million in March, they are still coming in at about four times the pre-COVID pace of just over 200,000 each week.
Over the past couple months, states have grappled with a surge in new virus cases, deaths and hospitalizations, alongside the arrival of cold weather that typically drives some weakness in hiring trends. States that have seen some of the biggest spikes in the virus have been the biggest contributors to new weekly claims, cementing the virus’s impact on the labor market.
“The recent surge in COVID cases has led to many states reimplementing lockdown measures and other business restrictions that will likely crimp the labor market recovery in the short run,” Deutsche Bank economists led by Matthew Luzzetti said in a note Monday. “We have already begun to see some evidence of this in the high-frequency data, with changes in a state’s jobless claims becoming increasingly correlated with the state’s growth in COVID cases.”
“As COVID cases continue to rise, hiring will likely continue to slow and could even reverse,” they added.
Meanwhile, continuing claims, which track the total number of Americans still receiving state unemployment benefits, unexpectedly declined for the week ended Dec. 12. And the number of Americans rolling onto longer-term federal unemployment programs also slowed: Based on this week’s report, another 26,556 Americans began collecting Pandemic Emergency Unemployment Compensation, while 8,200 fewer were collecting Pandemic Unemployment Assistance or Pandemic Emergency Unemployment Compensation. Last week, nearly 1 million Americans had joined these two programs combined.
These emergency-era federal programs were renewed in Congress’s newly approved $900 billion stimulus package, meaning that the more than 14 million total Americans on these programs will narrowly avert a lapse in benefits that would have come by year-end in absence of more relief. The new package also includes an additional $300 in weekly enhanced federal unemployment benefits, with these payments coming in at half the amount as was in Congress’s Coronavirus Aid, Relief, and Economic Security (CARES) Act earlier this year.
Some economists, as well as many Democratic lawmakers, have said the stimulus package does not go far enough to provide support to the millions of Americans still unemployed at the hands of the pandemic. But importantly, and at least until more aid can be debated in Washington next year, the new aid package also includes hundreds of billions of dollars in funding for the Paycheck Protection Program, which will likely give small businesses across the country the ability to keep some workers on their payrolls.
“The biggest single component of the new COVID relief bill is the re-funding of the Paycheck Protection Program, with a total of $284 billion,” Pantheon Macroeconomics chief economist Ian Shepherdson said in a note Monday. “The new funding for the PPP is enough to save 4.75 million jobs over a full year, other things equal. We don’t know yet how long the program will run.”
“With services jobs now in free fall, according to the alarming daily data from Homebase, this can’t come a second too soon, though in reality firms likely won’t be able to make applications under the new program for another couple weeks,” he added. “Still, this is a big step forward, helping bridge the gap between the third wave-ravaged services economy and the post-pandemic world of the spring.”
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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