The number of initial weekly unemployment claims rose to 885,000, reflecting rising economic charges in cities and states struggling to increase the number of Covid-19s – and prompted strong calls from Congress to provide another fiscal stimulus to millions of Americans. in order to preserve its financial solvency.
The latest figure, an increase of 23,000 from the previous week’s revised level, does little to address economists ’concerns about the combination of renewed business closures and closures, weakening retail spending, and federal financial support programs for borrowers and unemployed workers.
It was higher than expected. The average estimate of the economists interviewed by FactSet is that initial claims will fall to 790,000 and see 5.7 million ongoing claims. The monthly employment report, published in early December, showed that employers added just 245,000 jobs last month – a sharp slowdown that surprised economists as well.
Daniel Zhao, chief economist at Glassdoor, said the current track is bright and alarming. “The recovery will weaken as we set off into a harsh winter. With the epidemic booming, employers will re-let or lay off workers as states impose new restrictions and consumer demand dries up.”
As in recent weeks, economists say weekly unemployment data do not reflect the full range of labor market problems as many workers have exhausted their state unemployment benefits and turned to expanded federal unemployment benefits. expires at the end of the year. Economists also warn that spending cuts will be inevitable, as debt and eviction moratoriums will end in a few weeks. According to a recent survey, more than four in ten who lost income due to Covid-19 have not regained their previous earning power.
“The economy needs to move forward to stay healthy and let it stop, it hurts everyone,” said Josh Wright, founder and chief economist at economic consulting firm Wrightside Advisors.
This decline in consumer activity already seems to be happening. Retail data released on Wednesday highlighted people’s willingness to spend, with a 1.1 percent drop in November, according to the Department of Commerce.
“Nervous Americans are also more cautious in their travels and spending, fearing they will get sick,” said Mark Zandi, chief economist at Moody’s Analytics.
According to Zandi, this was the latest signal to lawmakers that delaying further fiscal support will have systemic economic consequences. “Without further tax exemptions for lawmakers, employment is likely to decline and unemployment to rise in the coming months,” he predicted.
Although the stock market has been boosted by positive vaccine news, the reality on the ground is much harsher for workers and small businesses, said Andrew Stettner, a senior fellow at The Century Foundation.
“The pain will be lasting if Congress does not raise the value of unemployment benefits again, for both families and the economy, which is suffering from declining consumer spending,” he warned.
In addition to the legal stalemate over the promise of additional support for laid-off Americans and small businesses in difficulty, Wright blamed the Wall Street syngeneic response on Main Street for a growing economic disaster.
“Of course, politics plays a role, but markets are also willing to look beyond short-term turbulence,” he said. “Without market turmoil or downturns, it will be harder for policymakers to justify bold action.”