The number of Americans claiming unemployment benefits fell slightly last week to 900,000, still a historically high level that indicates ongoing job cuts in a raging coronavirus pandemic.
The US Department of Labor report on Thursday pointed out that President Joe Biden inherited an economy that weakened this winter as virus cases increased, meals were restricted in cold weather and aid the federal bailout expired.
The government said 5.1 million Americans continued to receive state unemployment benefits, up from 5.2 million the previous week. This suggests that while some of the unemployed find jobs, others are likely to use their public benefits and move to separate extended benefit programs.
More than 10 million people are receiving help from these extended programs, which now offer up to 50 weeks of benefits, or from a new program that offers benefits to entrepreneurs and self-employed people. In total, nearly 16 million people were unemployed in the week ending January 2, the latest period for which data is available.
“Unemployment claims continue to show that a labor market is unable to grow as long as COVID-19 remains in charge,” said Daniel Zhao, senior economist at Glassdoor. “While the vaccine offers a light at the end of the tunnel, we are still a long way from a complete reopening of the economy that could lead to rehires and stop further layoffs.”
New viral infections have started to slow down after months of relentless increases, although they remain high, averaging 200,000 a day. The death toll in the United States from the pandemic that erupted 10 months ago has exceeded 400,000.
Economists say one of the factors that has likely increased jobless claims over the past two weeks is a government financial aid package that was enacted in late December. Among other things, it provided federal unemployment benefit of $ 300 per week in addition to regular public unemployment assistance. The new benefit, which runs until mid-March, could encourage more Americans to seek help.
Once the vaccines are more widely distributed, economists expect growth to accelerate in the second half of the year, as Americans unleash pent-up demand for travel, dining, and movie and concert hall tours. This spending should, in theory, boost hiring and start to regain the nearly 10 million jobs lost due to the pandemic.
But for now, the economy is losing ground. Retail sales have fallen for three consecutive months. Restrictions on restaurants, bars and some stores – along with the reluctance of most Americans to shop, travel and eat out – have resulted in sharp spending cuts. Revenues from restaurants and bars fell 21% in 2020.
The loss of so many jobs has created hardship for millions of American households. In December, employers cut 140,000 jobs, marking the first loss since April and the sixth consecutive month in which hiring has weakened. The unemployment rate remained stuck at a still high level of 6.7%.
Still, there are signs that the $ 900 billion federal aid package adopted late last month may have started to cushion the damage, largely thanks to checks for $ 600 sent to most. adults. The government started distributing the payments at the end of last month.
These payments likely contributed to an increase in spending on debit and credit cards issued by the Bank of America, the bank’s economists wrote last week. Total card spending jumped 9.7% for the week ended Jan. 9 from a year earlier. That was a 2% year-over-year increase before the stimulus payments, the Bank of America said.
Last week, Biden unveiled a $ 1.9 trillion coronavirus plan that would provide, among other things, $ 1,400 in checks for most Americans, which, in addition to the $ 600 already distributed, would bring the total to 2000 dollars per adult.
The new plan would also make $ 400 per week in federal benefits available to unemployed Americans and extend a moratorium on evictions and foreclosures until September. Biden’s proposal will require Congressional approval, and some Congressional Republicans have already expressed reservations about his size.