The number of Americans seeking unemployment benefits fell slightly last week to 900,000, still a historically high level that points to ongoing job cuts in a raging pandemic, AP reports.
The Labor Department’s report Thursday underscored that President Joe Biden has inherited an economy that faltered this winter as virus cases spiked, cold weather restricted dining and federal rescue aid expired. The government said 5.1 million Americans are continuing to receive state jobless benefits, down from 5.2 million in the previous week. That suggests that while some of the unemployed are finding jobs, others are likely using up their state benefits and transitioning to separate extended-benefit programs.
“Unemployment claims continue to show a job market unable to progress further as long as COVID-19 remains in the driver’s seat,” said Daniel Zhao, senior economist at Glassdoor. “While the vaccine offers a light at the end of the tunnel, we’re still far away from a complete reopening of the economy that could drive rehiring and stem further layoffs.”
Economists say one factor that has likely increased jobless claims in the past two weeks is a government financial aid package that was signed into law in late December. Among other things, it provided a $300-a-week federal unemployment benefit on top of regular state jobless aid. The new benefit, which runs through mid-March, may be encouraging more Americans to apply for aid.
Once vaccines become more widely distributed, economists expect growth to accelerate in the second half of the year as Americans unleash pent-up demand for travel, dining out and visiting movie theaters and concert halls. Such spending should, in theory, boost hiring and start to regain the nearly 10 million jobs lost to the pandemic.
There are signs that the $900 billion federal aid package enacted late last month may have begun to cushion the damage, in large part thanks to $600 checks being sent to most adults. The government began distributing the payments at the end of last month.
