The number of people applying for unemployment benefits edged higher last week to 745,000. Spencer Platt/Getty Images
COVID & Unemployment

Unemployment claims tick back up yet again

Associated Press Mar 4, 2021
The number of people applying for unemployment benefits edged higher last week to 745,000. Spencer Platt/Getty Images

The number of people applying for unemployment benefits edged higher last week to 745,000, a sign that many employers continue to cut jobs despite a drop in confirmed viral infections and evidence that the overall economy is improving.

Thursday’s report from the Labor Department showed that jobless claims rose by 9,000 from the previous week. Though the pace of layoffs has eased since the year began, they remain high by historical standards. Before the virus flattened the U.S. economy a year ago, applications for unemployment aid had never topped 700,000 in any week, even during the Great Recession.

All told, 4.3 million Americans are receiving traditional state unemployment benefits. Counting supplemental federal unemployment programs that were established to soften the economic damage from the virus, an estimated 18 million people are collecting some form of jobless aid.

Restrictions on businesses and the reluctance of many Americans to shop, travel, dine out or attend mass events have weighed persistently on the job market. Job growth averaged a meager 29,000 a month from November through January, and the nation still has nearly 10 million fewer jobs than it did in February 2020. Though the unemployment rate was 6.3% in January, a broader measure that includes people who have given up on their job searches is closer to 10%.

The data firm Womply reports that 64% of movie theaters and other entertainment venues, 40% of bars and 34% of hair salons and beauty shops are closed. And on Wednesday, the Federal Reserve reported that across the country, “overall conditions in the leisure and hospitality sector continued to be restrained by ongoing COVID-19 restrictions.”

On Friday, though, economists have forecast that the government will report a strong job gain for February of near 200,000, which would raise hopes that layoffs will slow. Optimism is rising that increasing vaccinations and a new federal rescue aid package that will likely be enacted soon will spur growth and hiring in the coming months. Many analysts foresee the economy expanding at an annual rate of at least 5 percent in the current quarter and 7 percent for all of 2021.

Already, crucial sectors of the economy are showing signs of picking up as vaccinations increase, federal aid spreads through the economy and the Fed’s low-rate policies fuel borrowing and spending. Last month, America’s consumers bounced back from months of retrenchment to step up their spending by 2.4% — the sharpest increase in seven months and a sign that the economy may be poised to sustain a recovery.

The solid gain suggested that many people were growing more confident about spending, especially after receiving $600 checks that went to most adults early this year in a federal economic aid package. Additional relief is likely for American households and businesses as Congress considers President Joe Biden’s proposal for a new aid package amounting to $1.9 trillion.

At the same time, rising bond yields in the financial markets are pointing to worries that higher inflation could be on the way as the economy recovers. This week, Lael Brainard, a member of the Fed’s Board of Governors, sought to calm investors by stressing that the Fed, while generally optimistic in its outlook, is still a long way off from raising interest rates or otherwise lessening its support for the economy.

COVID-19 Economy FAQs

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

Give me a snapshot of the labor market in the U.S.

U.S. job openings in February increased more than expected, according to the Labor Department. Also, the economy added over 900,000 jobs in March. For all of the good jobs news recently, there are still nearly 10 million people who are out of work, and more than 4 million of them have been unemployed for six months or longer. “So we still have a very long way to go until we get a full recovery,” said Elise Gould with the Economic Policy Institute. She said the industries that have the furthest to go are the ones you’d expect: “leisure and hospitality, accommodations, food services, restaurants” and the public sector, especially in education.

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

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