The number of Americans filing first-time claims for jobless benefits jumped to a near three-month high last week as mounting new COVID-19 infections led to more business restrictions, further evidence that the pandemic and lack of additional fiscal stimulus were hurting the economy.
The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy’s health, followed in the wake of data last week showing job gains in November were the smallest since the recovery started in May. Labor market distress is eroding demand, keeping inflation tame.
“Mass unemployment continues to weigh on economic growth and demand,” said Chris Rupkey, chief economist at MUFG in New York. “If Congress continues to sit on its hands without voting on a new relief package, the plight of the nation’s unemployed is going to grow darker by the hour.”
Initial claims for state unemployment benefits surged 137,000 to seasonally adjusted 853,000 for the week ended Dec. 5, the highest since mid-September. The weekly increase was the largest since March, when the nation was battered by the first wave of coronavirus infections. Economists polled by Reuters had forecast 725,000 applications in the latest week.
Unadjusted claims vaulted 228,982 to 947,504 last week. 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. Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.4 million people filed claims last week.
Jobless claims hit a record 6.867 million in March. They are above their 665,000 peak during the 2007-09 Great Recession.
The United States is in the throes of a fresh wave of coronavirus infections, with more than 15 million confirmed cases. Daily COVID-19 deaths reached 3,253 on Wednesday, boosting the U.S. total since the start of the pandemic to 289,740, with a record 106,219 people hospitalized.
New strict stay-at-home orders went into effect in California this week, affecting about three-quarters of the nearly 40 million people in the nation’s most populous state.
Other states and local governments have also imposed restrictions on businesses, which economists expect to lead to layoffs during winter, especially without additional pandemic relief money from the government.
A deal on another package remains elusive amid proposals and counterproposals. More than $3 trillion in government pandemic relief has helped millions of unemployed Americans cover daily expenses and companies keep workers on payrolls. The fiscal stimulus has almost dried up.
U.S. stocks were mixed. The dollar fell against a basket of currencies. U.S. Treasury prices rose.

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