- Initial weekly unemployment claims rise unexpectedly last week
- 885,000 new claims filed, with approximately 20.6 million on some sort of assistance
- The majority of claimants are on one of two federal emergency unemployment programs, which are set to expire on Dec. 26
Initial unemployment claims were unexpectedly higher for the week ending Dec. 12, disappointing economists who expected a decrease in claims.
The seasonally adjusted number of weekly jobless claims reached 885,000 for the week, the highest figure since Sept. 5. The tally also marked an increase of 23,000 from the previous week’s upwardly revised number of 862,000. Dow Jones economists had projected that the claims for the week ending Dec. 12 would fall to 808,000.
While weekly unemployment claims typically stood around 225,000 before the COVID-19 pandemic, they shot up sharply as business lockdowns threw millions out of work. Nearly 23 million people were receiving state benefits in May. Continuing claims fell from 5.8 million to 5.5 million for the week ending Nov. 28.
The shrinking number of continuing claims is likely an indicator of both out-of-work people returning to jobs and a continuing trend of unemployed people exhausting their state benefits, usually after six months, and moving to one of two federal emergency unemployment programs. These programs are set to expire on Dec. 26 unless extended by Congress.
A total of 9.2 million people were on the Pandemic Unemployment Assistance Program, which assists gig workers and others who don’t typically qualify for state benefits, for the week ending Nov. 28 – up from 8.6 million the week before. The number of people on the Pandemic Emergency Unemployment Compensation program rose from 4.5 million to 4.8 million.
In all, approximately 20.6 million people in the United States are receiving unemployment benefits of some sort. In Connecticut, there were 74,882 initial claims at the end of last week, up 141 percent from the previous year and in line with the 30-day average of 75,952 claims.
The upward trend in weekly claims indicates that employers are continuing to cut jobs due to the ongoing economic effects of the COVID-19 pandemic, which has prompted lockdowns, business restrictions, and diminished revenues. As COVID-19 infections surging and many states and municipalities reviving these restrictions, there have been several signs of a slowing economic recovery, including tepid hiring and lower than expected retail spending at the outset of the holiday season.
Economists are projecting that the labor market and economic growth are likely to slow down or contract in the last quarter of the year and first quarter of 2021. They anticipate that it will recover once widespread distribution of COVID-19 vaccines is accomplished.
Congress is currently attempting to close the deal on a new bipartisan economic stimulus package, which could pass this week. The legislation is widely expected to include an extension of federal emergency unemployment program as well as supplemental jobless benefits of $300 a week.
