WASHINGTON (AP) – The number of Americans applying for unemployment benefits rose to 861,000 last week, proving that layoffs remain painfully high despite a steady decline in the number of confirmed viral infections.
The number of redundant workers has risen by 13,000 from the previous week, which was sharply revised, the labor department said on Thursday. Before the virus broke out in the United States in March last year, weekly applications for unemployment benefits never rose more than 700,000, not even during the Great Recession of 2008-2009.
The figures show that the labor market has stalled, with employers adding only 49,000 jobs in January after cutting workers in December. Nearly 10 million jobs remain lost to the pandemic. Although unemployment fell from 6.7% to 6.3% last month, it did so in part because some people are no longer looking for work. People who are not actively looking for work are not considered unemployed.
However, fraudulent claims for unemployment assistance in some states and other issues, including potential backlogs of claims, can increase the total. Last week, for example, Ohio reported a large increase in applications, saying it had been set aside about half of the increase for further review out of concern about fraud. And this week, Ohio reported that applications under a federal program covering self-employed and gig workers have risen from about 10,000 to more than 230,000. This may reflect a backlog of applications, as Ohio only reported the information in the program two weeks ago.
Similarly, Illinois reported this week that unemployment claims have doubled under its regular state program – from 34,000 to nearly 68,000.
“Data on unemployment claims remains a mess,” said Stephen Stanley, chief economist at Amherst Pierpont.
Applications could rise in the coming weeks, economists said, due to ice storms that have caused business across the country. Yet economists are generally optimistic that as the weather improves, COVID vaccines are more widely administered and further federal aid is distributed, the economy will pick up in the spring and summer.
The increase in claims may also partly reflect the expansion of two federal unemployment benefit programs under a bailout package introduced by Congress late last year. The expansion of the programs meant that some people who had used up all their unemployment benefits were eligible again. The federal aid package also offers a $ 300-a-week unemployment benefit in addition to regular government benefits.
Thursday’s report showed that a total of 18.3 million people received unemployment benefits on January 30, compared to 19.7 million the previous week. About three-quarters of recipients receive checks from federal benefit programs, including programs that provide unemployment assistance after the 26 weeks most states provide. This trend indicates that a significant proportion of the unemployed have been out of work for more than six months, reflecting a gloomy labor market for many.
Yet the two federal unemployment assistance programs – one offering up to 24 weeks of extra support and another for the self-employed and gig workers – are planned within about a month.
President Joe Biden proposes that both programs be extended until August as part of his $ 1.9 billion package now being presented to Congress. The legislation also provides an additional $ 400 per week in federal unemployment benefits, in addition to state benefits. This money would replace a $ 300 per week benefit included in the aid package approved last year.
Some operating data indicate that rents are weak. UKG, a time management software company, estimates that the number of shifts worked nationwide has risen by just 0.2% among its mostly small business customers in the past month. That loud increase indicates that rents have been sluggish so far this month.
Yet the economy showed signs of increasing as states and cities eased a number of business constraints and the most recent round of $ 600 stimulus checks made their way through the economy. Sales at retail stores and restaurants soared in January, up 5.3% from December, the government said on Wednesday.
Furniture and electronics and household stores recorded some of the strongest gains, probably due to the healthy increase in home sales last year.
Factory production also increased last month, the Federal Reserve said Wednesday its fourth straight rise, led by greater production of steel and other metals.