About 900,000 workers filed for unemployment benefits last week as the labor market struggles to recover this winter. The number of jobless claims last week was down slightly from the week ended Jan. 9, when applications jumped by more than 100,000 to 926,000. The Labor Department said the increase for the Jan. 9 week—initially estimated as the largest weekly increase since March—was smaller than previously thought.
As Covid-19 infections increased into the winter, states and localities imposed new capacity restrictions on businesses such as restaurants. Further, some consumers remain hesitant to eat indoors, travel or go to a movie theater, reducing demand at places that remain open.
Delayed filings by workers over the Christmas and New Year holidays, as well as $300 a week in extra jobless benefits included in a coronavirus-relief package signed into law last month, also could have factored into the large claims increase for the week ended Jan. 9. Still, the four-week moving average for claims, which smooths out weekly volatility, rose in the week ended Jan. 9.
More broadly, the pandemic’s effects are restraining the economic recovery after steep losses last spring. Employers slashed 140,000 jobs in December, the first monthly decline in payrolls since the coronavirus shut down businesses this past spring. Consumers have cut back on purchases this winter after spending steadily for several months.
Economists expect hiring and spending to regain steam later this year. For one, warmer weather could bring more people out of their homes to spend when spring arrives.
A new round of fiscal stimulus—President Biden is pursuing $1.9 trillion in additional aid—and the prospect of widespread vaccine distribution also led economists to raise their growth projections in a January Wall Street Journal survey. They projected U.S. gross domestic product to grow 4.3% in the fourth quarter of 2021 from the same period a year earlier, up from a 3.7% growth forecast in the previous month’s survey.