Around 779,000 people filed for first-time unemployment benefits last week, a slight easing of jobless claims after a winter surge that saw the number rise along with a spike in coronavirus cases. Economists were expecting a total of around 830,000.
The data, released Thursday by the Department of Labor, represents the first full week of initial claims since President Joe Biden took office. Eleven months into the pandemic, the number remains at a level four times higher than the pre-pandemic average for jobless claims.
Continuing claims, which trail by one week and reflect the total number of people filing for ongoing benefits, is now 4.5 million vs. 4.7 million expected.
“Approaching the one-year mark of the pandemic, it is quite striking that new claims remain so elevated. It is not only the depth but also the duration of the downturn taking a toll,” said Mark Hamrick, senior economic analyst at Bankrate. “As of the latest count, 17.8 million Americans were on some form of unemployment assistance.”
Federal Reserve Chairman Jerome Powell has consistently noted that the course of the economy is determined by the course of the virus. Most recently, Powell said that progress in vaccinations is just as crucial.
Biden has pledged 100 million shots in arms in his first 100 days in office. The pace of vaccinations at the outset of his administration was 1 million per day, according to Bloomberg’s vaccine distribution tracker.
“We are in a race between the spread of more contagious variants of the virus, and reaching herd immunity with vaccinations,” said Diane Swonk, chief economist at Grant Thornton. “The economy cannot fully reopen until the virus is wrestled to its knees via a combination of vaccinations, masks, testing, tracing and therapeutics.”
Lawmakers voted on Tuesday to advance a proposal for an additional $1.9 trillion in coronavirus relief aid, following the passage of a $900 billion measure in December that included $600 economic impact payments and a slew of enhanced jobless benefits. However, that money is slow to make its way back into the economy.
“It may be a few months before warmer weather, less Covid, and more consumer confidence before consumers go on a shopping spree, which will provide the real stimulus and job creation,” said Dan North, senior economist at Euler Hermes North America.
“Consumers haven’t received enough of the $900 billion in stimulus money from the December act to make a notable impact on job creation yet,” North said. “Furthermore, any additional income support from that act or the proposed $1.9 trillion American Rescue Plan is likely to be added to consumers’ already huge pile of excess savings, and not spent immediately.”
The focus now turns to Friday’s closely watched employment report from the Bureau of Labor Statistics.
“The economy’s struggles remain most evident in the job market,” said Mark Zandi, chief economist at Moody’s Analytics. “Employment declined in December, and will eke out only a small gain of no more than 200,000 in January. Employment is still down almost 10 million from its pre-pandemic peak, with employment down across every major sector save the federal government.”