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U.S. Jobless Claims Pull Back From Recent High, But Remain Above 800,000

  • New and continuing jobless claims are lower than expected in latest data, but remain elevated
  • Slower hiring, business restrictions, and other factors weigh on economic recovery ahead of anticipated widespread COVID-19 vaccine rollout next year
  • Two federal unemployment programs are set to expire this week

Initial jobless claims for the week ending Dec. 19 stood at 803,000, a lower figure than expected but a sign that layoffs are ongoing as the recovery from the COVID-19 pandemic slows. The report, released early due to the Christmas holiday, also comes shortly before two federal emergency unemployment programs are set to expire.

The initial claims were down 89,000 from the previous week, which had an upwardly revised tally of 892,000 – a three-month high. It was better than the expected level of 880,000 claims, but remained well above the typical pre-pandemic level of 225,000 claims.

Another 5.3 million people were receiving state benefits for the week ending Dec. 12, down from 5.5 million in the previous week and beating projections that continuing claims would hold steady. The reduction in ongoing claims reflects both people returning to work and those who exhaust their benefits, typically after six months.

There were 9.3 million people receiving funds through the Pandemic Unemployment Assistance program for the week ending Dec. 5, which provides benefits to gig workers and others who traditionally don’t qualify for state benefits. This figure was up 27,000 from the previous week. Another 4.8 million were on Pandemic Emergency Unemployment Compensation, which provides 13 additional weeks of benefits to those who have used up their state benefits – a reduction of 8,200.

Altogether, approximately 20.4 million people were on some form of unemployment assistance.

The United States economy has showed signs of slowing amid a new surge in COVID-19 infections. Many businesses continue to remain closed or subject to new restrictions, and consumers have shown more reticence. Hiring has slowed for five consecutive months, and holiday spending in November fell short of expectations. Economists are projecting that the recovery will accelerate next year as COVID-19 vaccines are widely distributed, but that hiring could flatten or even reverse before that point.

The two federal emergency unemployment assistance programs are set to expire on Saturday. A $900 billion stimulus bill passed Monday by Congress extends the programs through spring and provides for $300 in additional unemployment benefits for 11 weeks. However, President Donald Trump has asked Congress to amend the legislation by increasing the amount of direct payments, providing more assistance to small businesses, and curbing “wasteful and unnecessary items” in an appropriations bill packaged with the stimulus.

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