U.S. unemployment claims climb again as COVID-19 cases continue to rise

Nationally, 778,000 initial unemployment insurance claims were filed last week, reports the U.S. Department of Labor.

In the week ending November 21, the advance figure for seasonally adjusted initial claims was 778,000, an increase of 30,000 from the previous week’s revised level. The previous week’s level was revised up by 6,000 from 742,000 to 748,000. The 4-week moving average was 748,500, an increase of 5,000 from the previous week’s revised average. The previous week’s average was revised up by 1,500 from 742,000 to 743,500.

The advance seasonally adjusted insured unemployment rate was 4.1 percent for the week ending November 14, a decrease of 0.2 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 14 was 6,071,000, a decrease of 299,000 from the previous week’s revised level. The previous week’s level was revised down by 2,000 from 6,372,000 to 6,370,000. The 4-week moving average was 6,615,250, a decrease of 438,000 from the previous week’s revised average. The previous week’s average was revised down by 1,250 from 7,054,500 to 7,053,250

While DOL does not speculate on the reasons for the increase in the weekly data releases, others have little hesitation in assigning responsibility to the pandemic’s third wave. The Associated Press writes,

The number of Americans applying for unemployment benefits rose last week for a second straight week to 778,000, evidence that the U.S. economy and job market remain under strain as coronavirus cases surge and colder weather heighten the risks.

Again, uncertainty plays a role in tightening the job market.

The spike in virus cases is intensifying pressure on companies and individuals, with fear growing that the economy could suffer a “double-dip” recession as states and cities reimpose restrictions on businesses.

“With infections continuing to rise at an elevated pace and curbs on business operations widening, layoffs are likely to pick up over coming weeks,″ said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “Even as job growth is continuing, the labor market remains under stress and far from complete recovery.″

Further complicating the recovery is the expiration of benefits that had allowed households to build savings and maintain consumption earlier in the year. 

The impending expiration of the two supplemental federal unemployment programs the day after Christmas could end benefits completely for 9.1 million jobless people. Congress has failed for months to agree on any new stimulus aid for jobless individuals and struggling businesses after the expiration of a multi-trillion dollar rescue package it enacted in March.

Most economists warn that without more government aid, hardships will deepen for individuals, small companies and localities and states, which will likely have to slash services and jobs.

The expiration of benefits will make it harder for the unemployed to make rent payments, afford food or keep up with utility bills. Most economists agree that because unemployed people tend to quickly spend their benefits, such aid is effective in boosting the economy.

The key to recovery, as the Wall Street Journal reports, is controlling COVID.

“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 postvaccine world,” said Constance Hunter, chief economist at KPMG LLP.

The positive reports on vaccine availability mark a positive turn.