U.S. unemployment claims jump sharply

Filings exceed 1 million for first time since July as virus numbers surge

New claims for state unemployment benefits sharply increased last week as the resurgent pandemic continued to batter the U.S. economy.

A total of 1.15 million workers filed initial claims for state unemployment benefits during the first full week of the new year, the Labor Department said. Another 284,000 claims were filed for Pandemic Unemployment Assistance, an emergency federal program for freelancers, part-time workers and others normally ineligible for state jobless benefits. Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 965,000.

It was the first week since July in which the unadjusted number of new state claims exceeded 1 million. Before the pandemic, weekly filings typically totaled around 200,000.

Economists had been bracing for a fresh wave of claims as the coronavirus battered the service industry. The government reported last week that the economy shed 140,000 jobs in December, the first drop in employment since last spring, with restaurants, bars and hotels recording steep losses.

“Today’s report shows that we’re in a deep economic hole, and we’re digging in the wrong direction,” said Daniel Zhao, senior economist with Glassdoor. “The report obviously shows that the rise in claims is worse than expected, and there is reason to think that things are going to get worse before they are going to get better.”

The holidays may have depressed unemployment claims in previous weeks, with people delaying filing for benefits until the new year. But several economists expressed skepticism.

“I don’t think there’s any question that on the margin, there could be some unusual things going on,” said Mark Hamrick, senior economic analyst at Bankrate. “But we have to think also about the fact that these are not our grandfather’s unemployment lines — meaning much of this is done digitally. I think if one just tries to understand human nature, it doesn’t make a lot of sense that someone would be delaying a request for financial assistance when they’re out of work.”

More likely, economists say, is the availability of a $300 federal supplement to other unemployment payments — part of the stimulus package signed into law last month — prompted an increase in demand for benefits.