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  • December 03, 2020
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Nearly 714,000 people filed initial claims for state unemployment insurance, compared with 836,000 in the prior week, before statistical adjustments. With seasonal swings factored in, the figure was 712,000, a drop of 75,000, the Labor Department reported Thursday.

The decline came after two consecutive weekly increases, though the level of claims remained at levels unseen in previous recessions.

The numbers are likely to have been artificially depressed by the Thanksgiving holiday, said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago. “People don’t apply as much when there are holidays,” she said. “There is a natural falloff that occurs, but we just don’t know how big it was.”

She compared the effect to the drop in hospitalization data for the coronavirus that has been noted on Sundays and holidays. Although the decline in the claims number was seemingly good news, the Thanksgiving-related drop could cause a measure of catch-up when next week’s numbers are released.

“It’s still bad,” she said, noting that 25 states reported more than 1,000 layoffs each last week. “They are broad-based and concentrated in the same sectors we saw when people pulled back in March — food services, health care, retail and hotels.”

Almost 289,000 new claims were tallied under the Pandemic Unemployment Assistance program, which provides support to freelancers, gig-workers, the self-employed and others not ordinarily eligible for unemployment insurance.

Pandemic Unemployment Assistance is one of two emergency federal jobless benefit programs set to expire at the end of the month. Millions will be scrambling to make up for the lost funds, even as the absence of those dollars in consumers’ pockets dampens overall economic growth.

Republicans and Democrats on Capitol Hill continue to spar over the size of any new stimulus package, with G.O.P. leaders opposed to the kind of multitrillion-dollar relief effort envisioned by Democrats.

The prospect of vaccines to combat the virus is a hopeful long-term signal, but the economy will face serious challenges until inoculations can begin on a mass scale in the spring, said Michael Gapen, chief U.S. economist at Barclays.

He is looking for a U.S. economic growth rate near zero in the first quarter, followed by a rebound later next year as consumer spending picks up.

“I think the economy is on a solid footing, but we may just hit a couple of bumps between now and the end of the first quarter,” Mr. Gapen said. “Stimulus would be helpful, of course.”

Article source: https://www.nytimes.com/live/2020/12/03/business/us-economy-coronavirus/

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