Nearly 800,000 Americans filed for unemployment in the last week of 2020
The number of Americans filing for jobless aid stayed essentially flat in the last week of 2020, as enhanced unemployment benefits kicked in for laid-off workers.
Roughly 787,000 people applied for unemployment in the week ending January 2, the Labor Department said Thursday. That's just 3,000 less than the previous week's claims, which were revised up to 790,000. Another 161,000 applied for Pandemic Unemployment Assistance, a special federal program for self-employed, freelance and gig workers.
It's the first time since March that new unemployment claims, including for self-employed workers, fell below 1 million a week when accounting for seasonal adjustments. However, part of the drop can be attributed to last week's holidays, during which state unemployment offices were closed and some Americans took time away from daily routines.
Now that a $300 boost in weekly benefits is available to the jobless, claims are expected to rise. And while the economy is expected to recover quickly once vaccinations are broadly distributed, that point remains far in the future.
"While prospects for the economy later in 2021 are upbeat, the economy and labor market will have to navigate some difficult terrain between now and then, and we expect claims to remain elevated," economists at Oxford Economics said in a report
This year has seen a record number of announced job cuts, according to outplacement firm Challenger, Gray & Christmas. Some 2.3 million cuts were announced this year, nearly quadruple the figure for 2019.
"The underlying story here is clear. A combination of COVID fear and state-mandated restrictions on activity in the services sector is squeezing businesses, and no real relief is likely until a sustained decline in pressure on hospitals emerges," Ian Shepherdson of Pantheon Macroeconomics said in a research note.
Job market likely weakened in December
The unemployment figures are released the day before a highly anticipated government report on December hiring. Economists expect it to show that hiring slowed for a sixth straight month, with some analysts estimating that the economy shed jobs in December.
Other signs show that hiring and economic growth are faltering under the weight of the pandemic. On Wednesday, payroll processor ADP reported that private employers shed 123,000 jobs in December, the first such monthly decline since April. ADP's figures generally track the government's jobs data over time, though they can diverge significantly from month to month.
Last month, Coca-Cola Co. said it would cut 2,200 jobs from its global workforce, with about half those layoffs occurring in the United States. 3M, a major manufacturer, has said it will lay off 2,900 workers worldwide.
In November, U.S. consumer spending declined for the first time in seven months, having steadily weakened since summer.
The Associated Press contributed reporting.
