Unemployment claims rise amid latest distress

The U.S. economy is showing fresh signs of deceleration, hammered by layoffs, a surge in coronavirus cases and the lack of fresh aid from Washington.

The Labor Department reported Thursday that 886,000 people filed new claims for unemployment benefits last week, an increase of nearly 77,000 from the previous week. Adjusted for seasonal variations, the total was 898,000.

The rise follows the announcement of layoffs by major companies including Disney and United Airlines in recent weeks and animpasse between Republicans and Democrats over another round of aid for the economy. A recent jump in coronavirus infections only added to the grim outlook.

“It’s discouraging,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The labor market appears to be stalled, which underscores the need for new stimulus as quickly as possible.”

The economy rebounded strongly in late spring and early summer as lockdowns eased in many parts of the country and employers brought back workers from furloughs. But those recalls have slowed, even as federal stimulus efforts have waned.

In past recessions, 800,000 new claims for state unemployment insurance in a week would have been extraordinary. But in the past 30 weeks, that figure has become a floor, not a ceiling.

The latest numbers “point to a lot of churn in the labor market, and it appears the rate of firings has picked up,” said Michael Gapen, chief U.S. economist at Barclays.

More layoffs are expected as sectors like leisure and hospitality struggle. In some states, restaurants have been able to salvage some business by serving diners outside, but that option will disappear in many areas as winter approaches.

A federal program set to expire at the end of the year, Pandemic Emergency Unemployment Compensation, is seeing a surge in new applications. It provides 13 weeks of extended benefits after the end of regular state payments, which typically last 26 weeks.

In the week that ended Sept. 26, the most recent period with available data, nearly 2.8 million people were getting the extended benefits, a jump fromfewer than 2 million the previous week. That increase was roughly equal to the decline in the number collecting state benefits.