Claims for unemployment benefits fell across most categories in Wednesday’s Labor Department report. Still the job market recovery has stalled while more than 20 million Americans need aid to make ends meet.
Another 803,000 Americans filed for first-time unemployment benefits last week on a seasonally adjusted basis.
That was a drop off from the week before but still nearly four times the claims during the same period in 2019, and yet another sign that the US job recovery has run into serious trouble.
During normal times, seasonal adjustments help smooth out wobbles in economic data and make it easier to read and compare. But during the pandemic, this trick hasn’t worked so well. Without seasonal adjustments, initial claims were much higher – 869,398 – last week, albeit still lower than the week before.
On top of that, 397,511 workers filed for benefits under the Pandemic Unemployment Assistance program, which provides aid to groups that aren’t usually eligible for jobless benefits, such as the self-employed. That number is not adjusted for seasonal swings.
Added together, 1.3 million Americans filed initial jobless claims last week on an unadjusted basis.
Continued claims, which count workers who have applied for benefits for at least two weeks in a row, stood at 5.3 million, slightly lower than in the prior week.
Congress agreed on a new round of stimulus to combat the fallout from the pandemic over the weekend. It would include an extension of the unemployment benefits that millions of Americans need to make ends meet. Benefits created specifically for the pandemic are otherwise slated to expire in just a matter of days.
However, President Donald Trump’s complaints about the bill, delivered on video via Twitter on Tuesday, raised the risk of more economic turmoil, not to mention a government shutdown. Trump asked Congress to amend the bill and up the amounts paid in stimulus checks.
A mixed economic picture
The economic agenda was stacked on Wednesday ahead of the Christmas holiday, and the picture was very mixed.
Americans’ personal incomes fell by 1.1%, or $221.8 billion, in November, far more than the 0.3% contraction economists had expected.
“A rapidly worsening health situation, weakening income, depleted savings for lower income families and cooler weather led consumers to slam their wallets shut in November,” wrote Gregory Daco, chief US economist at Oxford Economics, in a note to clients.
Incomes decreased as Paycheck Protection Program loans to businesses declined and government social benefits fell, according to the Bureau of Economic Analysis.
The bottom line is that “American households cut their holiday shopping early this year as new restrictions took effect, though businesses are likely still spending,” said Sal Guatieri, senior economist at BMO.
“The next two months could also be grim, with all hopes resting on the vaccine rollout and a new fiscal deal,” he said.
Personal consumptions expenditures contracted by 0.4%, or $63.3 billion.
Meanwhile, orders for durable goods such as machinery rose more than expected – by 0.9% – in November, led by orders in the transportation sector. Stripping out transport orders, the total number fell slightly below what economists had expected.
The economic recovery continues in an uneven and patchy manner, both for businesses as well as workers. As the year is drawing to a close and the virus continues to spread, economists predict a few more difficult months.