WASHINGTON- The number of Americans filing first-time claims for jobless benefits increased further last week, suggesting that an explosion in new COVID-19 infections and business restrictions were boosting layoffs and undermining the labor market recovery.
Still, the economy got off to a solid start in the fourth quarter, with consumer spending and business investment in equipment topping analysts’ expectations in October. Businesses also reported a sharp rebound in profits in the third quarter.
That was, however, insufficient to lift the heavy cloud over the economy. Personal income dropped last month and could decline further with about 13.6 million Americans due to lose government-funded unemployment benefits a day after Christmas.
The benefits, part of a more than $3 trillion government coronavirus relief package which has largely expired, contributed to record economic growth in the third quarter. Another package is expected only after President-elect Joe Biden is sworn in on Jan. 20. President Donald Trump is heavily focused on contesting his electoral loss to Biden.
Minutes of the Federal Reserve’s Nov. 4-5 meeting showed officials discussed how the US central bank’s asset purchases could be adjusted to provide additional support to the economy.
“The question is no longer whether the recovery will slow, it will,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania. “The real issue is by how much will it decelerate.”
Initial claims for state unemployment benefits increased 30,000 to a seasonally adjusted 778,000 for the week ended Nov. 21, the Labor Department said. That was the second straight weekly increase in claims and exceeded economists’ expectations for 730,000 applications in a Reuters poll.
The weekly claims report, the most timely data on the economy’s health, was published a day early because of Thursday’s Thanksgiving Day holiday.
Unadjusted claims jumped 78,372 to 827,710 last week. Economists prefer the unadjusted number because of earlier difficulties adjusting the claims data for seasonal fluctuations due to the economic shock caused by the pandemic.
Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.14 million people filed claims last week. There were at least 20.5 million people collecting unemployment benefits in early November.