Image Source: Ministry of Labor, February 4, 2021
By CHRISTOPHER RUGABER
Washington (AP) — The number of Americans seeking unemployment benefits fell to 779,000 last week. This is still a historically high total, indicating that a significant number of people continue to be unemployed in a viral pandemic.
Last week’s total fell from 812,000 last week to its lowest level in two months, according to the Ministry of Labor. Still, before the virus broke out in the United States in March, weekly applications for unemployment assistance did not exceed 700,000, even during the Great Depression.
Thursday’s report reflects the US job market, where employment has weakened for the sixth straight month and is still suffering from a pandemic. In addition to the $ 900 billion federal aid package approved at the end of last year, this is the main reason President Joe Biden is urging Congress to enact a $ 1.9 trillion economic bailout program.
Overall, 17.8 million people received unemployment benefits during the week ending January 16, the latest period of data availability. This is down from 18.3 million last week.
Despite the bleak overall outlook for the economy, there have been some hopeful signs this week. Car sales grew steadily in January, and the business growth rate of the service sector rose. So was spending on housing construction.
This does not mean that the job market is nearing recovery, and is usually lagging behind a broader economic recovery. Employers are hesitant to hire during periods of low consumer spending.
According to data provider FactSet, the January government employment report released on Friday is expected to show a modest increase in employment, perhaps 100,000. The unemployment rate is expected to remain high at 6.7% for the third straight month.
Increased employment represents a welcome improvement over December, when employers cut employment for the first time since April. Still, the economy is still reducing nearly 10 million jobs from pre-March levels, so that modest increase will bring little benefit to most unemployed people.
As vaccination becomes more widely distributed and implemented in the coming months, economists will grow in a sustainable clip, especially if Congress provides significantly more assistance to homes, small businesses, states and cities. Is expected to accelerate. Under these circumstances, some analysts predict that 2021’s economic growth could exceed 6%.
According to debit and credit card spending tracked by Bank of America, personal consumption increased in January after $ 600 checks were distributed to most adults under last year’s $ 900 billion aid package. did. Michelle Meyer, a US economist at Bank of America, estimates that these checks are being used faster than similar, but large, $ 1,200 payments distributed last spring.
Still, Americans save most of their payments, Meyer said in a study note. Its growing pool of savings could help increase consumer spending after the pandemic has been curtailed.
At the same time, according to Homebase, which provides SMEs with a job scheduling system, SMEs struggled throughout most of January and are likely to have curtailed overall employment last month. According to Homebase, the percentage of customers closed mainly due to government regulations increased from December to January, and the number of working employees decreased.
A $ 900 billion stimulus bill enacted in December extended the federal unemployment program and provided $ 300 weekly unemployment assistance, according to a report this week from the Century Foundation, but many states still distribute funds. Not done. The report found that as of January 30, only 38 states were paying benefits under the Federal Extended Assistance Program. Only 40 states issued checks under separate unemployment assistance programs for freelancers and self-employed people.
Often, the delay was due to former President Donald Trump’s hesitation in signing the stimulus bill, which he finally signed on December 27. It was the day after the two programs expired, and previous recipients had to reapply to the program and state, and had to wait for guidance from the Ministry of Labor on the details of the extension. Many states use outdated software for their unemployment allowance systems. If the unemployment allowance program changes, it can be difficult to update.
Source: Associated Press