Resurgence in coronavirus-induced layoffs to keep U.S. jobless claims high

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Resurgence in coronavirus-induced layoffs to keep U.S. jobless claims high


No matter whether U.S. jobless benefit claims rise or fall in the last full week of December, one thing is clear: the coronavirus has punched another hole in the labor market.

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economists polled by MarketWatch predict new jobless claims — a rough measure of layoffs — will climb to 835,000 in the seven days ended Dec. 26 from 803,000 in the prior week.

See: MarketWatch Economic Calendar

Yet since Christmas fell within the time frame, it’s possible new claims could fall for the second straight week and dip below 800,000 again. Many people wait until the following week after a major holiday to apply for benefits.

Whatever the case, the simple truth is jobless claims remain disappointingly high. An 800,000 increase in new claims, for example, would still be a record high compared to any week before the coronavirus pandemic.

The prior record of 665,000, set in 2009, was easily shattered early in the pandemic, when new claims peaked at a whopping 6.87 million in the last week of March.

Assuming, that is, the numbers are correct.

A government watchdog agency recently determined the jobless claims data is not entirely accurate. Fraud, double-counting and inconsistent reporting standards have inflated the number of new and continuing claims, according to the General Accounting Office.

Read: Jobless claims inflated, GAO finds

And: Why the inaccurate jobless claims report is still useful to investors

Even if the numbers are somewhat exaggerated, though, they are still very high and show just how much damage the coronavirus has done to the labor market and broader economy.

Until the latest resurgence in coronavirus cases began in November, new claims had been trending lower and lower. They fell to a pandemic low of 711,000 in early November.

The record coronavirus spike then pushed new claims to almost 900,000 and they’ve been hovering in the 800,000s for the past three weeks.

Complicating matters are the holiday season and the delay in President Trump’s approval of extended unemployment benefits.

Trump signed the bill last Sunday but so late that some people may experience disruptions in benefit payments. The new round of fiscal stimulus also includes more federal aid for businesses that retain workers.

Read: New federal coronavirus cash should keep economy afloat until vaccines are widespread

It’s likely new claims could gyrate sharply in the next few weeks and make it hard to glean any developing trends.

Economists say new weekly claims would have drop below 700,000 and keep falling to signal a sustained improvement in the labor market. And that might not happen until the coronavirus vaccines become more widespread, government restrictions on business are relaxed, and the economy starts to return to normal.

“Until fiscal stimulus actually begins to land in households’s pockets, the spread of virus remains the primary determinant of any recovery in the labor market,” said economists at Deutsche Bank.



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