U.S. sees spike in unemployment claims

When coronavirus cases began rising across the country this fall, economists sounded a warning: Without government aid, layoffs were sure to follow.

Now those dire predictions are coming true.

More than 947,000 workers filed new claims for state unemployment benefits last week, the Labor Department said Thursday. That was up sharply from the week before, more than reversing a one-week dip that many economists attributed to the Thanksgiving holiday. Applications have now risen three times in the last four weeks and are up nearly a quarter-million since the first week of November.

Nearly 428,000 applied for Pandemic Unemployment Assistance, a federal program that covers freelancers, self-employed workers and others who don’t qualify for regular state benefits. That figure, too, was a sharp increase from the previous week.

Unemployment filings during the pandemic have been far above levels recorded in previous recessions. But through most of the fall, they had been edging down week after week, providing some hope that businesses could avoid another round of job cuts. That hope is fading.

Unlike in the spring, when tens of millions of people lost their jobs in a matter of weeks, the recent increase in layoffs has been gradual. Virtually no one is predicting a repeat of March and April, when as many as 6 million people a week filed for unemployment benefits.

“This is all a slow-moving disaster, not like the spring where it happened so quickly,” said Ian Shepherdson, chief economist for Pantheon Economics.

But it is a disaster nonetheless, he said. As governments order restaurants and retailers to shut down or reduce capacity, and as consumers pull back on traveling, shopping and other activities that put them at risk, it will lead to layoffs and business failures, which will ripple through the economy.