The U.S. Labor Department said Thursday that jobless claims rose to 885,000, an increase of 23,000 from the previous week’s revised level. The previous week’s level was revised up by 9,000 from 853,000 to 862,000.
Even though claims are down sharply from a peak of close to 7 million in March, hiring during the holiday season has been impacted by a surge in coronavirus cases across the country. The unemployment rate is at 7.6 percent, while retail sales fell last month, raising fears of a consumer spending slowdown during December, according to the Financial Times.
“The next few months will be pretty rough for the labor market as you do see businesses having to contend with this latest wave of Covid cases,” Sarah House, senior economist at Wells Fargo Securities, said, per the Wall Street Journal. “You are seeing those government restrictions coming into play again.”
Looking more closely at the figures, state unemployment benefits fell to 5.5 million from 5.8 million, a sharp decline from a peak of nearly 23 million in May. This indicates that many Americans are finding jobs or have quit looking for jobs. It also may indicate that many of the unemployed have used up their state benefits, which usually end after six months, according to the Associated Press.
Economic recovery is rocky
Economic recovery in the U.S. has been rocky, but with the huge surge in coronavirus cases over the last month, topping 200,000 a day, and stricter mandates on businesses and individuals at the state level, the economy’s modest recovery is increasingly in danger.
“U.S. weekly jobless claims continue to head in the wrong direction,″ Edward Moya, an analyst at the currency trading firm OANDA, wrote in a research note. “The labor market outlook is bleak as the winter wave of the virus is going to lead to more shutdowns.″
Any action to prop up the economy now lies with the Federal Reserve and Congress. On Wednesday, the Fed pledged to keep buying debt until “substantial further progress has been made” in the recovery, but Federal Reserve Chairman Jay Powell said that “fiscal stimulus was needed to more effectively support the economy in the coming months.”
Meanwhile, a much anticipated $900 billion stimulus bill with a number of relief measures- including benefits for self-employed and gig workers set to expire at the end of the month has again stalled in Congress, as the chance of a government lockdown looms.
