Jobless Claims Hold at High Level as Recovery Navigates Covid-19 Surge
November 25 2020 - 5:59AM
Dow Jones News
By Sarah Chaney Cambon
Jobless claims likely held at a high level last week as the U.S.
economic recovery navigates a surge in new coronavirus cases and
tighter restrictions on businesses in some states.
Economists expect unemployment claims ticked down to 733,000
last week from 742,000 a week earlier. Worker filings for
unemployment insurance are down sharply from a peak of nearly seven
million in late March. But they remain higher than in any previous
recession -- the pre-pandemic peak was 695,000 in 1982 -- for
records tracing back to 1967.
Claims filings can be more volatile around the holidays, due to
workweek changes that can cause seasonal-adjustment anomalies. The
four-week moving average, which smooths out weekly variation, has
continued to move downward, indicating the labor market continues
to regain lost ground, but at a slower pace than over the
summer.
A nationwide surge in Covid-19 cases threatens to weigh on the
labor-market recovery, as many states and localities impose new
restrictions on businesses, though less stringent than the ones
introduced in the spring, economists say. Further, the spread of
the virus, combined with the onset of winter, is likely to send
more consumers indoors and hamper spending and employment in
industries like restaurants.
"Covid is driving the bus on the economy, and we're going to
have some hairpin turns until we get to the nice, straight open
road of the postvaccine world," said Constance Hunter, chief
economist at KPMG LLP.
The U.S. economy continues to recover, albeit more slowly than
when many businesses first reopened from lockdowns in late spring
and early summer. Growth in retail sales and employment has cooled
in recent months, government data show. Consumers' views toward the
economic outlook soured at the beginning of November, according to
the Conference Board, a private research group.
Still, the labor market has rebounded faster than many
economists projected. The unemployment rate, at 6.9%, is down from
April's post-World War II high of 14.7%. But recent real-time
private-sector data point to a slowing job market. Growth in job
postings has slowed across the U.S., according to job site
ZipRecruiter. Small-business shutdowns and layoffs have increased
in recent weeks, according to researchers at the University of
Chicago, University of Illinois and University of California,
Berkeley. They analyzed data for 40,000 small businesses that use
Homebase, a scheduling-software company.
The number of people collecting unemployment benefits through
regular state programs, which cover most workers, fell to 6.4
million for the week ended Nov. 7 from 6.8 million a week earlier,
on a seasonally adjusted basis, according to the Labor Department.
Continuing claims declined throughout the summer and into the fall,
a sign many laid-off Americans returned to work.
However, some of the recent declines in continuing claims
represent individuals who have exhausted the maximum duration of
payments available through regular state programs, and are now
collecting money through a federal program that provides an extra
13 weeks of benefits. About 4.4 million people were receiving aid
through this extended-benefits program in the last week of October
-- the largest number since the program began this spring, Labor
Department data show.
Both the extended-benefits program and a program that provides
benefits to those not typically eligible for jobless aid -- such as
independent contractors and self-employed individuals -- will
expire at the end of this year.
Jason Rossman, 41 years old, of Watertown, Mass., has been
collecting unemployment benefits since he was furloughed this
spring from his project-management job in the trade-show industry.
He said jobless benefits, particularly the extra $600 a week that
ended this summer, have helped cushion his finances. Meanwhile, he
is only spending money on essentials like food and utilities and
has stopped dining out at restaurants.
Though he isn't in dire financial straits, Mr. Rossman said he
hopes to have a job by the time the federal extended-benefits
program ends in December. He has been applying to
project-management roles since his temporary layoff became
permanent in early October. But he hasn't landed one job interview
yet and feels his background in the hard-hit events industry is
limiting his career prospects right now.
"I'm very pessimistic that I'm going to actually find anything
any time soon," Mr. Rossman said. He hopes that as vaccines start
to become widely distributed and travel picks up, the trade-show
industry will bounce back so he can return to his former job.
Write to Sarah Chaney Cambon at sarah.chaney@wsj.com
(END) Dow Jones Newswires
November 25, 2020 05:44 ET (10:44 GMT)
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