Unemployment Claims Dropped Last Week as Coronavirus Cases Eased

on Feb26
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New claims for unemployment fell last week, the government reported on Thursday, the latest sign that the labor market’s recovery, however slow and unsteady, is continuing.

“The numbers look encouraging on the face of it,” said Gregory Daco, chief U.S. economist at Oxford Economics.

He and other analysts, however, cautioned against reading too much into a single week’s changes. The combined average of new state and federal unemployment insurance claims over the first eight weeks of this year is actually slightly higher than it was over the last eight weeks of 2020.

When you take step back and look at the broader picture, Mr. Daco said, “It does reflect an environment in which the labor market remains quite fragile.”

“I can’t imagine we’re going to see big changes in jobless claims for a while,” said Allison Schrager, an economist at the Manhattan Institute.

Much of last week’s decline in applications for state benefits can be traced to big drops in two states, California and Ohio, where there had previously been reports of increased fraud.

There was also a jump in the number of people applying for extended benefits under the federal Pandemic Emergency Unemployment Compensation program, which covers workers who have exhausted their regular insurance.

There is lag in the reporting of those numbers, but drops in one program may reflect movement into a different program, rather than a return to the work force, said Heidi Shierholz, a senior economist and the director of policy at the left-leaning Economic Policy Institute.

For people who depend on extended government unemployment insurance to pay their bills, the rise in claims is a sign the program is working as intended: that after a brief delay in getting additional benefits approved in December, workers are managing to enroll or re-enroll in the program.

This latest round of jobless assistance, though, is set to expire in mid-March. The $1.9 trillion relief package proposed by President Biden includes an extension of supplemental unemployment benefits for six months.

Leaders at the Federal Reserve and Treasury Department have said the damage to the labor market is much deeper than published government figures reflect. They estimate that the true unemployment rate is closer to 10 percent than to the 6.3 percent recorded in the Labor Department’s most commonly cited measure.

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