U.S. states likely saw roughly the same number of Americans file new jobless claims last week as during the prior week, as spiking COVID-19 cases and new restrictions drove still-more individuals out of work.
The Department of Labor is set to release its weekly report on new jobless claims Wednesday morning at 8:30 a.m. ET, or a day earlier than usual due to the Christmas holiday. Here are the main results expected in the report, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Dec. 19: 880,000 expected, 885,000 during prior week
Continuing claims, week ended Dec. 12: 5.560 million expected, 5.508 million during prior week
Initial unemployment claims during the week ended Dec. 12 unexpectedly jumped to a three-month high, unwinding some of the labor market’s recent recovery as new virus cases, stay-in-place orders and cold weather swept across the country. This increase in new claims also came during the survey week for the Labor Department’s non-farm payrolls report, suggesting job growth might slow even further — or even turn negative — in the monthly report out in early January.
“The recent surge in COVID cases has led to many states reimplementing lockdown measures and other business restrictions that will likely crimp the labor market recovery in the short run,” Deutsche Bank economists led by Matthew Luzzetti said in a note Monday. “We have already begun to see some evidence of this in the high-frequency data, with changes in a state’s jobless claims becoming increasingly correlated with the state’s growth in COVID cases.”
“As COVID cases continue to rise, hiring will likely continue to slow and could even reverse,” they added.
Meanwhile, economists also expect to see a modest uptick in this week’s continuing unemployment claims, which track the total number of Americans still receiving state unemployment benefits. And an increasing number of Americans have also been rolling onto longer-term federal unemployment programs recently: Last week, nearly 1 million Americans began collecting Pandemic Unemployment Assistance or Pandemic Emergency Unemployment Compensation, which were both authorized as part of Congress’s virus relief package from the spring.
These emergency-era federal programs were renewed in Congress’s newly approved $900 billion stimulus package, meaning that the more than 14 million total Americans on these programs will narrowly avert a lapse in benefits that would have come by year-end in absence of more relief. The new package also includes an additional $300 in weekly enhanced federal unemployment benefits, with these payments coming in at half the amount as was in Congress’s Coronavirus Aid, Relief, and Economic Security (CARES) Act earlier this year.
Some economists, as well as many Democratic lawmakers, have said the stimulus package does not go far enough to provide support to the millions of Americans still unemployed at the hands of the pandemic. But importantly, and at least until more aid can be debated in Washington next year, the new aid package also includes hundreds of billions of dollars in funding for the Paycheck Protection Program, which will likely give small businesses across the country the ability to keep some workers on their payrolls.
“The biggest single component of the new COVID relief bill is the re-funding of the Paycheck Protection Program, with a total of $284 billion,” Pantheon Macroeconomics chief economist Ian Shepherdson said in a note Monday. “The new funding for the PPP is enough to save 4.75 million jobs over a full year, other things equal. We don’t know yet how long the program will run.”
“With services jobs now in free fall, according to the alarming daily data from Homebase, this can’t come a second too soon, though in reality firms likely won’t be able to make applications under the new program for another couple weeks,” he added. “Still, this is a big step forward, helping bridge the gap between the third wave-ravaged services economy and the post-pandemic world of the spring.”
This post will be updated with the results of the Labor Department’s weekly jobless claims report Wednesday morning at 8:30 a.m. ET. Check back for updates.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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