WASHINGTON (AP) – The number of people seeking unemployment benefits skyrocketed to 965,000 last week, the highest since late August and a sign that the resurgent virus has likely increased layoffs.
The latest unemployment insurance claim numbers released Thursday by the Department of Labor, remain at levels never seen until the virus attacks. Before the pandemic, weekly orders totaled about 225,000. They increased to almost 7 million last spring, after nationwide shutdowns took effect. Orders declined during the summer, but have stood at over 700,000 since September.
The high rate of layoffs coincides with an economy that faltered as consumers avoided traveling, shopping and eating out due to the growing number of viral cases. More than 4,300 deaths were reported on Tuesday, another record. The closure of restaurants, bars and other places where people gather in California, New York and other states has probably forced layoffs.
Some states and cities are resisting closings, partly for fear of the economic consequences, but increasing the risk of new infections. Minnesota allowed the face-to-face dinner to resume this week. Michigan is about to do the same. Some bars and restaurants in Kansas City are extending their hours.
Economists say that once coronavirus vaccines are more widely distributed, a broader recovery is expected in the second half of the year. The next Biden government, along with the House and Senate now entirely led by Democrats, is also expected to promote more rescue aid and spending measures that could accelerate growth.
Still, many analysts also fear that, with millions of Americans still unemployed and up to one in six small businesses closing their doors, those most affected by the crisis are unlikely to benefit from a recovery anytime soon.
“While the outlook for the economy at the end of 2021 is optimistic, the recovery in the labor market has receded,” said Nancy Vanden Houten, economist at Oxford Economics, “and we expect claims to remain high, with the risk that they will rise. from last week. “
Last week’s help requests may have increased in part because state employment offices were closed over the holidays, requiring some unemployed to wait until last week to apply. The addition of $ 300 a week federal unemployment insurance, as part of a bailout package enacted late last month, may also have encouraged more people to apply, said Vanden Houten.
Many people in the arts and entertainment fields have lost most or all of their income because the coronavirus has closed the venues. They include Shelby Lewis, a classical trumpeter in Baton Rouge, Louisiana, who has not performed since early March, when he played Bach with a Kansas City music chamber.
Lewis, 48, is receiving $ 400 in weekly unemployment benefits, including the new $ 300 federal benefit, and his wife is still working. He appreciates federal aid, for which freelance musicians like him were not eligible in the past.
Fearing, however, that many classical music groups will close forever, Lewis is changing his career back to photography and design, which he did for a decade before becoming a full-time musician.
“I think there will generally be a decline for small regional orchestras,” he said.
In addition to last week’s first claims for unemployment, the government said on Thursday that 5.3 million Americans continue to receive state unemployment benefits, up from 5.1 million the week before. This suggests that fewer people who are out of work are finding jobs.
About 11.6 million people received unemployment benefits from two federal programs in the week ending December 26, the last period for which data are available. One of these programs offers extended benefits to people who have exhausted their state aid. The other provides benefits for self-employed and contract workers.
These two programs had expired towards the end of December. They were renewed late, until mid-March, in the $ 900 billion rescue aid package that Congress passed and President Donald Trump signed the law. That legislation also included $ 600 relief checks for most adults and an additional $ 300 weekly unemployment insurance payment. Congressional Democrats are in favor of raising checks to $ 2,000 and extending federal aid beyond March, as is President-elect Joe Biden.
The weakness of the US labor market was painfully clear in the December employment report that the government released last week. Employers lay off jobs for the first time since April, when the pandemic increased its control over consumers and businesses.
The figures also show a very uneven labor market: Losses last month focused on restaurants, bars, hotels and entertainment venues – places that offer face-to-face services that some governments have restricted or that consumers are avoiding. Educational services, mainly colleges and universities, also cut staff in December. The same happened with film and music studios.
Most other large industries, however, reported job gains. Many economists hoped last spring that job losses would spread to more industries. Although all sectors of the economy initially laid off workers, most of them avoided deep job cuts. Manufacturing, construction and professional services like engineering and architecture, for example, all created jobs in December.
At the same time, many companies seem reluctant to increase hiring dramatically. A government report on Tuesday showed that employers announced fewer open jobs in November than in October. The decline, although small, was widespread in most sectors. Even now, the country has almost 10 million jobs less than before the pandemic put the economy in a deep recession nearly a year ago, having recovered only 56% of jobs lost in the spring.
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AP business writer Alexandra Olson contributed to this New York report.