WASHINGTON – Despite a drop in weekly jobless claims, the United States economy is far from healed after a year in which tens of millions of people were rendered unemployed due to the coronavirus pandemic, many of whom remain out of work.
New filings for unemployment benefits last week dropped below 800,000 for the first time in a month, the Labour Department reported on Thursday, but experts say that is more likely a statistical fluke related to the holidays and political manoeuvres in Washington rather than a sign that the economy is finally on track for a sustained recovery.
As the US continues to weather the world’s largest Covid-19 outbreak, even as vaccines are finally being deployed, analysts see more lay-offs on the horizon, at least in the early weeks of 2021.
“While prospects for the economy later in 2021 are upbeat, the economy and labour market will have to navigate some difficult terrain between now and then,” said Nancy Vanden Houten of Oxford Economics.
New initial jobless claims slipped to 787,000 for the week ended December 26, a drop of 19,000 from the prior week, said the Labour Department.
Another 308,262 people filed new claims for Pandemic Unemployment Assistance (PUA), one of the programmes available to jobless workers who would not normally be eligible for benefits.
That means the total new applications remain above a million long after the business closures ordered in March to halt the spread of Covid-19 turned the economy upside down.
Drama in Washington
Those business closures sent the unemployment rate spiking to 14.7% in April, but it has since declined, falling to 6.7% in November as companies modified or restarted operations even as the virus remained rife.
Nonetheless, the weekly filings for unemployment aid have remained above the worst single week of the 2008-10 global financial crisis, and 19.6 million people were receiving jobless benefits under all government programmes as of the week ended December 12, said the Labour Department.
Covid-19 cases also are hitting record levels in parts of the country, prompting local governments to order renewed business restrictions, meaning another jump in claim filings could be waiting this year.
Industries like travel, hotels, restaurants and entertainment have been devastated.
Grant Thornton chief economist Diane Swonk tweeted that she is “worried about a jump in claims post-holiday as those who delayed reup and containment measures by states intensify with post-holiday surge”.
In addition to the holiday impact, applications could also have been held down by legislative confusion over the fate of PUA and other special pandemic aid due to expire before the end of 2020.
Congress finally approved both, but President Donald Trump did not sign the new relief package into law until the day after some programmes expired on December 26.
“We think that holiday noise and uncertainty about the extensions of benefits may have held down claims last week,” said Oxford’s Vanden Houten.
“The risk is for a rise in claims in the weeks ahead, now that emergency programmes have been extended and an additional US$300 (RM1,206) in weekly benefits is being provided” by Congress. – AFP, January 2, 2021
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