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US jobless claims soar to 965,000 as COVID surge triggers layoffs | Coronavirus pandemic News

The number of Americans filing for unemployment benefits with states surged to 965,000 last week as soaring COVID-19 infections and measures to contain them accelerate layoffs.

The number of Americans filing for unemployment benefits climbed toward one million last week as business-sapping restrictions designed to contain soaring COVID-19 infections continue to hobble the United States labour market recovery.

Some 965,000 people filed initial jobless claims with states in the week ending January 9, the US Department of Labor said on Thursday. That is the highest reading in five months and an increase of 181,000 over the previous week.

Initial jobless claims are a proxy for layoffs, and last week’s numbers were worse than many economists had expected.

“While prospects for the economy later in 2021 are upbeat, the labor market recovery has taken a step backward and we expect claims to remain elevated with the risk that they rise from last week’s levels,” Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients on Thursday.

Continuing claims, which measures the total number of laid-off workers collecting state unemployment benefits, rose for the first time since November to 5.27 million in the week ending January 2 – an increase of 199,000 over the previous week’s reading.

The US labour market recovery started to stall in the final quarter of 2020. In December, the economy shed 140,000 jobs, slamming the brakes on seven consecutive months of jobs gains.

Other economic indicators have also been flashing red as the US continues to break records for COVID-19 infections.

Consumer spending –  which drives roughly two-thirds of US economic growth – fell in November.

The number of people collecting benefits from both state and federal programmes fell by 744,511 to 18.4 million in the week ending December 26.

Economists attribute that fall to the lapsing of federal benefits before a new virus relief aid bill was signed on December 27. Now that federal jobless benefits have been renewed, those claims could rise again.

The raft of new coronavirus relief measures passed in December includes a $300 weekly federal top-up to state unemployment benefits and provisions allowing laid-off workers who qualify to claim up to 24 weeks of federal unemployment benefits after they’ve exhausted state aid.

And more government largesse is expected now that the Democrats have cemented control over both houses of Congress, making it easier for President-elect Joe Biden to enact key parts of his economic agenda.

Biden has said that December’s stimulus deal would not be the final one and that more generous benefits would be forthcoming to help the nation weather the pandemic.

The president-elect is set to unveil a new $1.5 trillion stimulus plan on Thursday.

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