New York CNN Business  — 

In a sign that the labor market is slowly continuing to improve, 751,000 Americans filed for first-time unemployment benefits last week, the Department of Labor said Thursday in its last report before the presidential election.

That’s down 40,000 from the prior week, which was revised slightly higher. These figures reflect seasonal adjustments.

Unemployment claims have been drifting downward in recent months, but they remain far higher than they were prior to the pandemic. In recent weeks they have fallen below 800,000 for the first time since claims first spiked in March as coronavirus-fueled shutdowns began.

Just under 360,000 people filed initial claims under the Pandemic Unemployment Assistance program, which Congress created as part of its $2 trillion coronavirus relief package to provide assistance to those not typically eligible for benefits, such as gig workers and the self-employed. That’s up nearly 15,000 from the week before.

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Together, initial applications for benefits stood at about 1.1 million last week without seasonal adjustments.

Continued jobless claims – which count people who have applied for benefits for at least two weeks in a row – stood at 7.8 million, down 709,000 from the prior week’s revised level, on a seasonally adjusted basis.

The initial claims report was released at the same time as the Commerce Department reported that the US economy in the summer recovered much of the historically enormous ground it lost in the spring. But while the expansion was the fastest rate on record in the third quarter – an increase of 33.1% on an annualized and seasonally adjusted basis – the recovery remains incomplete, and the economy remains smaller than it was before the pandemic began.

Workers exhausting regular benefits

The declining number of continued claims, however, is not necessarily a good sign. Long-term unemployment is surging as the national recovery softens amid a new surge in coronavirus cases. A growing number of laid-off workers have been unable to find new jobs and are exhausting the regular state benefits, which typically last 26 weeks.

They are shifting to an extended federal safety net, primarily the Pandemic Emergency Unemployment Compensation program, which Congress also created in March to provide the jobless with an additional 13 weeks of benefits.

About 3.7 million people were collecting these pandemic benefits as of Oct. 10. That’s up more than 387,000 from the week before.

And another nearly 401,000 Americans were receiving extended benefits, which provide payments for up to an additional 20 weeks depending on the state. The federal government is fully funding this program during the pandemic, instead of asking states to contribute half.

That extended benefits figure is down 44,200 from the prior week. Some states have been ending their extended benefits program as their unemployment rates improve.

However, those longer-term benefits will not be around much longer. The pandemic extension of payments – as well as the program for gig workers and the self-employed – expire at the end of the year.

Nearly 14 million people, or more than 60% of the total number of people claiming unemployment benefits, are in these two programs, said Nancy Vanden Houten, lead US economist for Oxford Economics. Lawmakers have been unable to come together to pass extensions to their earlier relief measures, including a $600 federal boost to weekly benefits, which expired at the end of July.

In addition, the feds will no longer pick up half the cost of extended benefits

A total of 22.7 million Americans – or roughly one-seventh of the US workforce – were claiming unemployment benefits, as of Oct. 10. That’s down 416,000 from the prior week.

“Alarmingly, there has been little attention paid to the fact that millions of Americans will soon run out of their unemployment benefits because they have not been called back to work or can’t find a job,” said Andrew Stettner, senior fellow at The Century Foundation.