Key Highlights
- New claims for unemployment benefits jumped for second straight week
- US Department of Labor indicated 828,000 people applied for state benefits plus 311,000 applied for Pandemic Emergency Assistance
As the COVID pandemic continues to soar in all areas within the US, new, rising claims for unemployment benefits underline ongoing weaknesses in the job market. New filings are up by more than 100,000 from the first week in November when unemployment filings hit their lowest level since the outbreak of the pandemic in spring.
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The US Labor Department recorded 828,000 unadjusted new claims for unemployment benefits last week, an additional 78,000 claims compared to the previous week. Last week was the second week in a row that new claims began moving in the wrong direction and the largest two-week increase in claims filed since April.
Additionally, some 311,000 now jobless gig workers and self-employed applied for relief benefits from the federal government’s Pandemic Unemployment Assistance program. Together, the total of new claims for unemployment benefits last week hit nearly 1.1M people.
This increase in new claims mirrors the increase in new layoffs, closures and restrictions as businesses large and small are dealing with surging COVID infections. In just the past two weeks alone, infection rates have increased +43.2% and deaths have increased +60.5%, according to the Center for Systems Science and Engineering at John Hopkins University.
“The most obvious culprit for rising claims is the surging pandemic,” said Daniel Zhao, senior economist for the career site Glassdoor. “It seems like it was only a matter of time before it (pandemic consequences) started to show up in the economic data.”
Data from US Commerce Department indicates that the economy is not universally bleak despite the growing levels of unemployment. Orders for big-ticket items such as machinery increased in October, new home sales and existing home sales are hitting record highs, households now have savings of more than $1T compared to what they had pre-pandemic – savings that could fuel consumer spending once vaccines become available – and the stock market (the least reliable economic indicator) hit record highs in November.
However, let’s remember that the economic outlook is particularly bleak for the most pandemic-exposed people and industries such as restaurants and bars, travel, service sectors, all of the arts, small businesses, education and government sectors to name just a few. The bottom line – more and more economists are forecasting a “double dip” or “W-shaped” recession as the economy continues to contract into early spring.
Already, according to the Commerce Department, personal income fell -0.7% in October as government relief aid declined and consumer spending increased only +0.5%, the smallest increase in consumer spending since the spring.
Disaster is eminent for nearly 14M people who have been receiving unemployment benefits when two emergency programs, the Pandemic Emergency Unemployment Compensation Program and the Pandemic Unemployment Assistance Program, are set to expire the day after Christmas.
To make matters worse concerning this “benefits cliff,” foreclosure, eviction and student loan moratoria are set to expire at the end of the year as well. Without any extensions to these expiration dates or additional relief benefits programs, according to The New York Times, “people could lose their only source of income and lose the protections keeping them in their homes…” amid a soaring pandemic.
Thanks to the US Labor Department, the US Commerce Department, Glassdoor, National Public Radio and The New York Times.
Also read: 17th Straight Week of +1M Unemployment Claims, Economy Shrinks -4.8% in Q1 – Likely Just “Tip of the Iceberg”, NY State Evictions Moratorium Expires & Housing Courts Reopen
