U.S. recovery more tenuous as jobless claims rise, incomes fall
- by Emilio Sims
- in Money
- — Nov 27, 2020
New claims for unemployment benefits jumped last week for the second week in a row, signaling ongoing weakness in the job market as coronavirus infections continue to soar. Businesses also reported a sharp rebound in profits in the third quarter.
On Monday, the U.S. Department of Labor notified the state agency that the number of people receiving extended benefit unemployment insurance as a percentage of the labor force had fallen below the qualifying threshold for the state to continue dispersing funds under the program. Economists prefer the unadjusted number because of earlier difficulties adjusting the claims data for seasonal fluctuations due to the economic shock caused by the pandemic.
And the number of people receiving aid under the Pandemic Emergency Unemployment Compensation program - which offers 13 weeks of federal benefits to those who have exhausted state jobless aid - rose by 132,000 to 4.5 million.
"We know the benefit extension has been a critical safety net for many Oregonians, and this reduction in available benefits will be painful", said David Gerstenfeld, the acting director of the Oregon Employment Department.
For the week of November 7, the number of people collecting benefits under the Pandemic Unemployment Assistance program - which offers coverage to gig workers and others who don't qualify for traditional aid - rose by 466,000 to 9.1 million.
All told, almost 20.5 million people were receiving aid as of the week ended November 7. More than 12 million people have been infected in the country, according to a Reuters tally of official data.
That program as well as the help for gig workers and the self-employed are set to expire in late December. In second report, the Commerce Department said consumer spending, which accounts for more than two thirds of United States economic activity, rose 0.5% last month after increasing 1.2% in September.
Iowa Workforce Development said about 43.6 percent of claims are not related to coronavirus.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans rose 0.7 percent in October, the Commerce Department said in a fourth report.
The department also confirmed that the economy grew at a historic 33.1 percent pace in the July-September quarter. Some economists predict a contraction in gross domestic product the first three months of 2021.
The discouraging data on unemployment claims come as negotiations are at a standstill on possible new stimulus for the US economy, with no signs of serious negotiations between the outgoing Trump administration, Republicans who hold the majority in the US Senate and Democrats who control the House of Representatives.
