By Sarah Chaney Cambon and Hannah Lang 

Layoffs likely remained elevated last week as the labor-market recovery stalls this winter amid surging coronavirus cases, tightened business restrictions and a wary public.

Economists expect about 925,000 workers filed for jobless benefits last week, with the number holding nearly steady after claims for unemployment benefits jumped at the start of January. Claims, a proxy for layoffs, remain above the pre-pandemic peak of 695,000 and are higher than in any previous recession for records tracing back to 1967.

"Covid hasn't let up, and it's still creating massive amounts of economic havoc," said AnnElizabeth Konkel, an economist at jobs website Indeed.

As Covid-19 infections increased into the winter, states and localities imposed new capacity restrictions on businesses such as restaurants. Further, some consumers remain hesitant to eat indoors, travel or go to a movie theater, reducing demand at places that remain open.

Delayed filings by workers over the Christmas and New Year holidays, as well as $300 a week in extra jobless benefits included in a coronavirus-relief package signed into law last month, also could have factored into the large claims increase for the week ended Jan. 9. Still, the four-week moving average for claims, which smooths out weekly volatility, rose in the week ended Jan. 9.

More broadly, the pandemic's effects are restraining the economic recovery after steep losses last spring. Employers slashed 140,000 jobs in December, the first monthly decline in payrolls since the coronavirus shut down businesses this past spring. Consumers have cut back on purchases this winter after spending steadily for several months.

Economists expect hiring and spending to regain steam later this year. For one, warmer weather could bring more people out of their homes to spend when spring arrives.

A new round of fiscal stimulus -- President Biden is pursuing $1.9 trillion in additional aid -- and the prospect of widespread vaccine distribution also led economists to raise their growth projections in a January Wall Street Journal survey. They projected U.S. gross domestic product to grow 4.3% in the fourth quarter of 2021 from the same period a year earlier, up from a 3.7% growth forecast in the previous month's survey.

Many workers continue to rely on unemployment benefits. The number of people collecting unemployment benefits through regular state programs rose to nearly 5.3 million for the week ended Jan. 2, from 5.1 million a week earlier, according to the Labor Department. Still, over the course of the recovery the number of continuing claims has declined from a peak of nearly 25 million this past spring, as laid-off workers were recalled to their jobs or found employment elsewhere.

Sharon Goulden of San Antonio lost her job in the accounts-payable department of a copy-machine company last March. She said it was her first experience with unemployment.

"At 52, it was pretty scary," Ms. Goulden said.

She said weekly jobless benefits, including $400 in state-level benefits, helped her stay afloat financially. She and her husband also canceled streaming services and some cable-television channels so they could afford rent and car payments. Her husband, who works full time, started driving for meal-delivery company DoorDash Inc. to bring in extra cash.

Ms. Goulden said she submitted her résumé to about 20 to 40 jobs a week beginning in September, and heard back from a small percentage of employers.

Late last year, she got a new job in the billing department of a business-technology company. "I got really lucky," Ms. Goulden said.

Write to Sarah Chaney Cambon at


(END) Dow Jones Newswires

January 21, 2021 05:44 ET (10:44 GMT)

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