Jobless claims fall but stats still grim

WASHINGTON – The number of Americans seeking unemployment aid fell slightly last week to 787,000, a historically high number that points to a weak job market held back by the viral pandemic.

Thursday’s figure from the Labor Department, a slight decline from the previous week, shows that even with the pandemic recession in its 10th month, many businesses are still laying off workers. Before the recession, weekly jobless claims typically numbered around 225,000.

The renewed surge in virus cases has caused millions of consumers to avoid eating out, shopping and traveling. And states have imposed new restrictions on restaurants, bars and other businesses. Economists at TD Securities estimate that more than half of states are now restricting gatherings to 10 people or fewer, up from roughly a quarter in September.

Those restrictions are forcing many companies, having run through much of their cash reserves, to cut more jobs.

“Unemployment remains extremely high, although not nearly as bad as it was in the spring, and the pace of improvement in the job market has slowed dramatically from the summer,” said Gus Faucher, an economist at PNC Financial.

Many economists, along with the Federal Reserve’s policymakers, say they’re hopeful that once the coronavirus vaccines are more widely distributed, the economy will achieve a broader recovery in the second half of the year.

The $900 billion financial aid package that Congress enacted last month should also help accelerate an eventual rebound. Late Wednesday, Goldman Sachs upgraded its forecast for economic growth this year to a robust 6.4%, up from 5.9%.

Last month’s stimulus measure provided a $300-a-week federal jobless benefit on top of an average state benefit of about $320. As many as half the states are now distributing the federal benefit, according to an unofficial tally at UnemploymentPUA.com.

A federal program that provides extended benefits, after state benefits run out, was lengthened to 24 weeks by the aid package. That program will remain in place until mid-March. A separate program that provides jobless aid to contractors and gig workers who previously weren’t eligible was also extended for11weeks. Both benefits had briefly expired Dec. 26, threatening about 13 million people with a cutoff in aid.

The continued weakening of the job market coincides with other signs that hiring and economic growth are faltering. On Wednesday, payroll processor ADP reported that private employers shed 123,000 jobs in December.