U.S. unemployment claims increased last week, rising to 850,000

The winter pandemic resurgence and restrictions on business put in place to contain it are pushing unemployment claims. The Department of Labor reports

In the week ending December 12, the advance figure for seasonally adjusted initial claims was 885,000, an increase of 23,000 from the previous week’s revised level. The previous week’s level was revised up by 9,000 from 853,000 to 862,000. The 4-week moving average was 812,500, an increase of 34,250 from the previous week’s revised average. The previous week’s average was revised up by 2,250 from 776,000 to 778,250.

The advance seasonally adjusted insured unemployment rate was 3.8 percent for the week ending December 5, a decrease of 0.1 percentage point from the previous week’s unrevised rate.

Calculated Risk reports

There are an additional 9,244,556 receivingPandemic Unemployment Assistance (PUA)that increased from 8,555,763 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance. 

An additional 4,801,408 are receiving Pandemic Emergency Unemployment Compensation (PEUC) that increased from 4,532,876 the previous week. These last two programs are set to expire on December 26th.
 
This was much higher than expected, and this was for the BLS reference week for the December employment report.
The Associated Press reports that the numbers show

.. that nine months after the virus paralyzed the economy, many employers are still slashing jobs as the pandemic forces more business restrictions and leads many consumers to stay home. The number of claims was much higher than the 800,000 that economists had expected.

The resurgence of the virus threatens the fragile recovery.

With layoffs still elevated and new confirmed viral cases in the United States now exceeding 200,000 a day on average, the economy’s modest recovery is increasingly in danger. States and cities are issuing mask mandates, limiting the size of gatherings, restricting restaurant dining, closing gyms or reducing the hours and capacity of bars, stores and other businesses.

“U.S. weekly jobless claims continue to head in the wrong direction,” Edward Moya, an analyst at the currency trading firm OANDA, wrote in a research note. “The labor market outlook is bleak as the winter wave of the virus is going to lead to more shutdowns.”

Even with the beginning of vaccinations, the nation is months away from reaching a post-pandemic economy.

On Wednesday, the Federal Reserve signaled that it expects the economy to rebound at a healthy pace next year as viral vaccines become widely distributed. But Chair Jerome Powell warned that the next three to six months will likely be painful for the unemployed and small businesses as pandemic cases spike.

The state Employment Security Department will release Washington claims data later today.