Layoffs remain elevated, 803,000 seek aid
The number of Americans seeking unemployment benefits fell by 89,000 last week to a stillelevated 803,000, evidence that the job market remains under stress nine months after the coronavirus outbreak sent the U.S. economy into recession and caused millions of layoffs.
The latest figure, released Wednesday by the Labor Department, shows that many employers are still cutting jobs as the pandemic tightens business restrictions and leads many consumers to stay home. Before the virus struck, jobless claims typically numbered around 225,000 a week before shooting up to 6.9 million in early spring when the virus — and efforts to contain it — flattened the economy. The pace of layoffs has since declined but remains historically high in the face of the resurgence of COVID-19 cases.
“The fact that more than nine months into the crisis, initial claims are still running at such a high level is, in absolute terms, bad news,” Joshua Shapiro, chief U.S. economist at the economic consulting firm Maria Fiorini Ramirez Inc., wrote in a research note. “With the pandemic again worsening, it is likely that claims will remain quite elevated for some time.”
The latest data on unemployment claims came on the same day that the government reported that consumer spending — the principal driver of the economy — fell in November for the first time since April. The 0.4% drop, coming in the midst of the crucial holiday shopping season, added to concerns that weak consumer spending will slow the economy in coming months. Economists suggested that the viral crisis, combined with diminished income and colder weather, likely led Americans to pull back in November.
Also on Wednesday, the government said that sales of new single-family homes sank 11% from October to November, though purchases remain up nearly 21% from a year ago. Boosted by rock-bottom mortgage rates, housing has proved resilient since the health crisis erupted last spring.
Another report Wednesday showed that orders to U.S. factories for high-cost manufactured goods rose a moderate 0.9% in November, with a key category that tracks business investment plans showing a gain. The rise in orders for durable
goods, which are items that are expected to last at least three years, followed even stronger gains in recent months. The pace of orders has now nearly regained its pre-pandemic level.
In its report on applications for unemployment aid, the government said the total
number of people who are receiving traditional state benefits fell to 5.3 million for the week that ended Dec. 12 from a week earlier. That figure had peaked in early May at nearly 23 million. The steady decline since then means that some unemployed Americans are finding work and no longer receiving aid. But it also indicates that many of the unemployed have used up their state benefits, which typically expire after six months.
Millions more jobless Americans are now collecting checks under two federal programs that were created in March to ease the economic pain inflicted by the pandemic. Those programs had been set to expire the day after Christmas. On Monday, Congress agreed to extend them as part of a $900 billion pandemic rescue package.
On Tuesday night, though, President Donald Trump suddenly raised doubts about that aid and other federal money by attacking Congress’ rescue package as inadequate and suggesting that he might not sign it into law.