WASHINGTON (AP) – The number of Americans applying for unemployment assistance rose last week to 861,000, evidence that layoffs remain painfully high despite a steady drop in the number of confirmed viral infections.
Applications from laid-off workers were up 13,000 from the previous week, which was sharply revised above, the Department of Labor said Thursday. Before the virus broke out in the United States last March, weekly claims for unemployment benefits had never exceeded 700,000, even during the 2008-2009 Great Recession.
The figures show that the labor market has stagnated, with employers adding up to only 49,000 jobs in January after cutting workers in December. Nearly 10 million jobs remain lost due to the pandemic. Although the unemployment rate fell last month from 6.7% to 6.3%, it did so in part because some people stopped looking for work. People who are not actively looking for work are not considered unemployed.
However, fraudulent claims for unemployment benefits in some states and other issues, including accumulations of claims, may be raising the total. Last week, for example, Ohio reported a large increase in applications and said it had dropped out about half of that increase for a later review out of concern about fraud. And this week, Ohio reported that applications under a federal program that covers self-employed and contract workers went from about 10,000 to more than 230,000. This could reflect an application delay, because Ohio had not reported data from that program until two weeks ago.
Similarly, Illinois reported this week that unemployment claims under its regular state program doubled, from 34,000 to nearly 68,000.
“Unemployment claims data remains a disaster,” said Stephen Stanley, chief economist at Amherst Pierpont.
Applications may increase in the coming weeks, according to economists, due to ice storms that have caused business shutdowns across the country. However, economists are generally optimistic that as the weather improves, COVID vaccines are administered more widely and more federal aid is distributed, the economy will recover in the spring and summer.
The increase in claims may also reflect, in part, the extension of two federal unemployment benefit programs under a package of grants that Congress enacted late last year. The extension of these programs meant that some people who had exhausted all their unemployment benefits were eligible to reapply. The federal aid package also provided a weekly unemployment benefit of $ 300, in addition to the usual state benefits.
Thursday’s report showed that a total of 18.3 million people were receiving unemployment benefits on January 30, down from the previous week’s 19.7 million. About three-quarters of these beneficiaries receive checks from federal benefit programs, including programs that provide unemployment benefits beyond the 26 weeks given by most states. This trend suggests that a considerable proportion of the unemployed have been out of work for more than six months, reflecting a bleak labor market for many.
However, the two federal unemployment assistance programs, one that provides up to an additional 24 weeks of support and another that covers the self-employed and workers, are expected to expire in a month.
President Joe Biden is proposing to expand the two programs through August as part of his $ 1.9 trillion package he now has in Congress. The legislation would also provide an additional $ 400 a week in federal unemployment benefits, in addition to state benefits. This money would replace a $ 300 a week benefit that was included in last year’s approved relief package.
Some industry data suggests that recruitment remains weak. UKG, a company that provides time management software, estimates that among its mostly small business customers, the number of shifts worked nationwide has increased by just 0.2% in the last month. This lukewarm increase indicates that hiring has been slow this month.
Still, the economy has shown signs of recovery as states and cities have eased some business restrictions and the latest round of $ 600 stimulus checks has made its way into the economy. Retail store sales and restaurants soared in January, jumping 5.3% from December, the government said Wednesday.
Furniture and home appliances and home appliances stores recorded some of the strongest increases, probably the result of last year’s good gain in home sales.
Factory production also increased last month, the Federal Reserve said on Wednesday its fourth consecutive increase, led by higher production of steel and other metals.