Unemployment claims rise to 770,000 with layoffs still high
The number of Americans seeking unemployment benefits rose last week to 770,000, a sign that layoffs remain high even as much of the U.S. economy is steadily recovering from the coronavirus recession.
Thursday’s report from the Labor Department showed that jobless claims climbed from 725,000 the week before. The numbers have dropped sharply since the depths of the recession last spring but still show that employers in some industries continue to lay off workers. Before the pandemic struck, applications for unemployment aid had never topped 700,000 in any one week.
The four-week average of claims, which smooths out weekly variations, dropped to 746,000, the lowest since late November.
A total of 4.1 million people are continuing to collect traditional state unemployment benefits, down 18,000 from the previous week. Including separate federal programs that are intended to help workers displaced by the health crisis, 18.2 million Americans were receiving some form of jobless aid in the week of Feb. 27, down by 1.9 million from the week before.
The continuing layoffs are occurring even as the overall job market has shown solid improvement. Last month, U.S. employers added a robust 379,000 jobs, the most since October and a sign that the economy is strengthening as consumers spend more and states and cities ease business restrictions.
With vaccinations accelerating, hopes are rising that Americans will increasingly travel, shop, eat out and spend freely after a year of virus-induced restraint.
President Joe Biden’s $1.9 trillion relief package is also expected to help accelerate growth, especially with most adults this week receiving $1,400 stimulus checks that should fuel more spending. An extension of $300 weekly unemployment benefits into early September will provide support, too, along with money for vaccines and treatments, school re-openings, state and local governments and ailing industries ranging from airlines to concert halls.
Yet the nation is still 9.5 million short of the number of jobs it had in February 2020. And Federal Reserve Chair Jerome Powell suggested Wednesday after the Fed’s latest policy meeting that the overall economic outlook remained cloudy.
“The state of the economy in two or three years is highly uncertain,” Powell said at a news conference after the Fed signaled that it expects to keep its key interest rate near zero through 2023 despite some solid economic gains and concerns about rising inflation pressures.
By most barometers, business activity in the economy’s vast and hard-hit service sector is still far from normal. The data firm Womply said, for example, that as of early last week 63% of movie theaters, galleries and other entertainment venues were closed. So were 39% of bars, 32% of gyms and other sports and recreation businesses and 30% of restaurants.
COVID-19 Economy FAQs
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.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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