- Weekly unemployment claims fall to 709,000, continuing a gradual improvement in the labor market
- However, some of the steady decline is credited to the migration of beneficiaries from state programs to federal ones set to expire at the end of the year
- Record COVID-19 cases and slow progress on stimulus continue to concern economists
New unemployment claims fell to a seasonally adjusted figure of 709,000 last week, again reaching the lowest level since March. However, it also remains at an elevated level as companies continue to shed jobs, with concerns that further labor recovery could be jeopardized by a new surge in COVID-19 infections.
The number was down from the previous week’s adjusted figure of 751,000 new claims. There were also 298,000 new claims under the Pandemic Unemployment Assistance program, which assists freelancers, gig workers, and others who normally do not qualify for state benefits.
Continuing claims dropped from 7.2 million to 6.8 million. While this is partially an indicator of workers returning to previous positions or new jobs, it also reflects the continuing transition of people from state benefits to the Pandemic Emergency Unemployment Compensation, a federal program offering a 13-week extension of unemployment benefits. Another 130,000 began receiving extended state or federal unemployment benefits last week.
Overall, approximately 21 million people remained on some form of unemployment as of Oct. 24.
Economists have typically said that a robust economic recovery hinges on control of the COVID-19 pandemic. While the recent development of a vaccine that is 90 percent effective heartened the markets, it will also take several months to finalize a vaccine and distribute it. In the meantime, new COVID-19 infections have hit record levels and could prompt tighter business restrictions and more cautious consumer activity, potentially impacting restaurants, retailers, and other businesses that have already been squeezed by diminished revenues during the pandemic.
The Federal Reserve continues to urge Congress to take action on economic stimulus. Partisan disagreements have hindered progress on any new relief package, and the two federal unemployment programs are set to expire at the end of the year.
