A worrying number of Americans likely filed new jobless claims last week, underscoring the strain to the labor market as rising COVID-19 cases set off another wave of stay-in-place restrictions that have begun to dampen business activity.
The Department of Labor is set to release its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here are the main results expected in the report, compared to consensus estimates compiled by Bloomberg:
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Initial jobless claims, week ended Dec. 12: 815,000 expected vs. 853,000 during the prior week
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Continuing claims, week ended Dec. 5: 5.7 million expected vs. 5.757 million during the prior week
Last week’s report had ended a seven-week streak during which new jobless claims held below 800,000, as record new COVID-19 case counts and hospitalizations gave way to new mobility restrictions across the country. Some officials have warned of even more restrictions following the holiday season, as regions look to stem the unabated spread of COVID-19 with widespread vaccine distribution still months away.
But these orders have already showed signs of unwinding some of the labor market’s recent strides toward recovery. New weekly jobless claims are expected to come in above 800,000 again in this week’s report, or about four times greater than new claims were averaging each week before the pandemic.
“The recent increase in case counts suggests the labor market could slip even further in the winter months, as hinted at by the latest jobless claims report,” JPMorgan economist Michael Feroli wrote in a recent note. “Even with a vaccine and possibly more fiscal stimulus on the horizon, by this time next year the labor market will likely fall short of anyone’s idea of full employment.”
Additionally, continuing jobless claims unexpectedly increased last week for the first time since August, suggesting slowing rehiring trends. Consensus economists expect an only slight drop in continuing claims this week, and mostly due to more workers exhausting regular state benefits and rolling onto longer-term federal unemployment programs.
But these federal programs are set to expire at the end of the month, unless Congress manages to enact another virus-relief bill before year-end to reauthorize these programs. More than 13 million Americans were claiming assistance as of last week under the Pandemic Emergency Unemployment Compensation and Pandemic Unemployment Assistance programs, both of which originated from Congress’s Coronavirus Aid, Relief, and Economic Security (CARES) Act in the spring.
“Despite continued negotiations, additional COVID-relief remains elusive while initial claims for unemployment insurance have increased in three out of the past five weeks,” wrote Wells Fargo economists in a note last week. “The focus on unemployment benefits has re-entered the spotlight at a time when initial claims for unemployment recently increased the most since March.”
As of Wednesday, congressional lawmakers were closing in on a deal reportedly worth about $900 billion, which would include another round of stimulus checks to Americans as well as enhanced federal unemployment benefits. Though lawmakers have remained deadlocked over stimulus negotiations for months, traders and economists have become increasingly hopeful for a deal by year-end, given any coronavirus-relief measures would likely be included as part of the broader government spending package for the fiscal year due to be passed at the end of the week.
This post will be updated with the results of the Labor Department’s weekly unemployment claims report Thursday morning at 8:30 a.m. ET. Check back for updates.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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