The number of AMERICANS filing for unemployment benefits fell last week, but the small decline did little to dispel concerns that the job market and the broader economy will struggle to recover from the devastation caused by COVID-19 in 2020.
The last major economic data of the year is a fitting reminder of how far the recovery has come and how far it still has to go. The US economy shrank at a record pace this year.
Initial claims for state unemployment benefits rose to a seasonally adjusted 787,000 in the week ended December 26, compared with 806,000 a week earlier, labor Department data showed on Thursday. While claims for jobless benefits fell for a second straight week last week, they are still roughly where they were three months ago and show little sign of materially improving any time soon.
The arrival of an effective COVID-19 vaccine and additional federal epidemic assistance programs lay the groundwork for a brighter 2021 future. But economists agree that the epidemic is still raging and the government’s response is divided, meaning more difficulties lie ahead in the months ahead before recovery takes hold.
“Despite the optimistic outlook for the economy in late 2021, the economy and labor market will have to face some difficulties between now and then, and we expect jobless claims to remain high,” Nancy Vanden Houten, chief United States economist at Oxford Economics, said in a report.
Fewer jobs in December?
The report also shows that as of mid-December, more than 19.5 million people were receiving some form of unemployment benefits, including emergency measures passed by Congress and extended in the latest aid law signed by President Donald Trump. These emergency measures now account for about two thirds of all effective unemployment benefits.
Continuing claims for state unemployment benefits fell to 5219,000 on December 19 from 5.322 million in the previous week, the lowest level since March. Economists, however, have taken little comfort from the decline, arguing that it has more to do with people no longer qualifying for jobs than finding new ones.
With the high number of new infections forcing new restrictions on business and consumer activity across the country, some economists now believe overall U.S. jobs could fall this month for the first time since April. In April alone, 20.8 million Americans lost their jobs.
Although jobs have been added every month since then, total employment is still about 10 million jobs below pre-pandemic levels.
The Labor Department releases December employment data on Jan. 8.
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