The latest weekly jobless benefits claims rose to 778,000 last week as coronavirus cases continue to soar. For the week ending November 21, claims totaled 778,000. This is way more than analyst predictions of 733,000. It is also much higher than the 742,000 claims of the previous week. The total is way lower than the peak of almost 7 million last March. However, it still surpasses pre-pandemic averages of 200,000 a week.
The Department of Labor released the jobs report a day earlier in light of Thanksgiving. Despite the holiday mood, more and more Americans are getting infected. Daily cases averaged over 174,000 last week. Health officials worry that Thanksgiving traditions could further increase the number of infected.
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Continuing claims fell last week to 6.07 million, a decline of 299,000. This indicates that Americans are slowly getting some jobs back. More importantly, it also means unemployment benefits are drying up. Millions of Americans will now undergo long-term unemployment without state benefits.
Those receiving jobless benefits climbed to 20.45 million for the week ending the 7th. This is 135,297 higher than the previous week. Even worse, the figures for the same week in 2019 show only 1.5 million jobless recipients. This indicates how severe the current labor shortage is. And there are no signs the disaster is slowing down. Economist AnnElizabeth Konkel of Indeed said that “an uptick this far into the crisis underscores that the coronavirus continues to batter the economy.” She pointed out that “the magnitude of initial claims shows no respite from new damage.”
Economists worry that Americans are remaining jobless for too long. The longer they stay unemployed, the bigger the chances the jobs they lost will stay lost forever. And, the benefits system is not in a position to help many people.
Jeffrey Wenger, the Senior policy researcher at RAND, says the system might overload. “The unemployment insurance system was never intended to fill the enormous gaps in today’s labor market,” he said. “Unemployment insurance is designed to deal with frictional unemployment — your skills are still useful, there’s still a market for your work. Structural unemployment is not like that,” he added.
The good news is that the labor market rebounded faster than expected. The current unemployment rate is at 6.9%, less than half from the April high of 14.7%. And the bad news? Private-sector data shows the job market slowing. Per recruiter site ZipRecruiter, job postings have decreased. Data from 40,000 small businesses show that layoffs and shutdowns increased over the past weeks.
In fairness, the economy remains on track towards recovery. But the pace is much slower now with the resurgence of the virus. Compared to the blazing growth last quarter, retail sales and employment are slower. According to the Conference Board, consumer economic outlook started becoming less optimistic starting November.
Vaccines Will Take Time
A slew of promising coronavirus vaccines is nearing availability this month. Plus, the incoming government seems willing to confront coronavirus at the federal level. This generated renewed optimism with America’s near future, and the market showed it. For the first time ever, the Dow Jones Industrial Average breached the 30,000 level.
Still, the effect would take time. “While there is hope that a vaccine could start to be distributed by end of the year, it doesn’t change today’s bleak reality,” Konkel added. “And in any vaccine scenario, a full economic recovery won’t occur instantaneously. Long-term joblessness is looking more likely to be a persistent challenge to a full recovery.”
Covid-19 Drives the Bus on the Economy
Constance Hunter, the chief economist at KPMG LLP, likens the recovery to a journey. “Covid is driving the bus on the economy, and we’re going to have some hairpin turns until we get to the nice, straight open road of the post-vaccine world,” she said. Fasten your seat belts then. Economic recovery might be within the horizon. Until the coronavirus problem gets controlled, it’s still a long journey ahead.
View the CNBC News Reporting that first-time unemployment claims total 778,000 for the week ending November 21:
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