Initial jobless claims fell slightly to 751,000 last week, raising fears that the improvement in the U.S. labor market will stall as new coronavirus cases surge and tax support wears off.
The small 7,000 decrease in weekly jobless claims under regular government programs was accompanied by a 3,839 increase in unemployment benefit claims from the federal pandemic, covering a wider pool of workers.
A total of 21.5 million Americans are still receiving unemployment benefits eight months after the coronavirus crisis began in the United States.
The data comes from concerns about a slowdown in the US labor market recovery, compounded by lower-than-expected private sector employment gains in October, according to the monthly report from contract processor ADP.
“It looks like a second wave of layoffs is hitting the economy, possibly due to the rising number of virus cases, but it could also mean that many companies cannot fully reopen and are facing bankruptcy so they will have to lay off their employees Come on, ”said Chris Rupkey, chief financial economist at MUFG.
The U.S. Department of Labor will release monthly non-farm employment data on Friday. Economists expect the US to have created around 600,000 jobs in October, the slowest pace since May when the economy slowly recovered from the pandemic shock. That would still be 10 million Americans unemployed compared to early 2020.
Economists also predict that unemployment will fall from 7.9 percent to 7.6 percent, according to average forecasts.
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Thursday’s unemployment claims data was released as Federal Reserve policymakers rallied for their second day of discussion at a regular FOMC meeting due to close that afternoon.
Although the labor market recovery has exceeded Fed expectations during the coronavirus emergency, officials remain concerned that the long withdrawal from the pandemic could cause permanent damage to many workers and households.
Fed officials have sounded the alarm over the need for additional fiscal stimulus, including aid to the unemployed, but the White House and Congress have failed to reach an agreement on a new bailout. The initial US $ 3 billion fiscal support measures passed earlier this year included payments of US $ 600 per week to the unemployed to support their incomes and expenses. These benefits expired at the end of July.
The Fed is unlikely to make changes to its monetary policy this week, which is already extraordinarily loose. Interest rates are close to zero and the Fed said it will not start raising until it has reached full employment and inflation has hit its 2 percent target and is “on track”, that level for some time To exceed.