US weekly initial jobless claims drop slightly

The number of Americans seeking unemployment benefits fell slightly last week to 793,000, evidence that job cuts remain high despite a substantial decline in new confirmed viral infections.

Last week’s total declined from 812,000 the previous week, the Labor Department said this morning. That figure was revised higher from the previously reported 779,000. The numbers point to a still-elevated number of layoffs. Before the virus erupted in the U.S. in March, weekly applications for jobless aid had never topped 700,000, even during the Great Recession.

The job market had shown tentative improvement last summer but then slowed through the fall and in the past two months has essentially stalled. In December and January combined, employers cut 178,000 jobs. Nearly 10 million jobs remain lost to the pandemic.

This morning’s government report also showed a sizable rise in the total number of Americans who are receiving jobless aid, including through extended benefit programs—a sign that long-term unemployment may be growing. All told, 20.4 million people were receiving benefits in the week that ended Jan. 23, the latest period for which data is available. That’s up sharply from 17.8 million from the week before. Part of that increase likely reflects the processing of a rush of claims after the extension of two federal aid programs just after Christmas.

The job market’s persistent weakness is fueling President Joe Biden’s push for a $1.9 trillion economic rescue package. Biden’s proposal would extend, through August, two federal unemployment benefit programs that are set to expire in mid-March.

Some economists, including former Treasury Secretary Larry Summers, have raised concerns that such a huge spending package would risk igniting inflation by fueling a burst of consumer spending later this year as the virus is gradually brought under control.

Yet on Wednesday, Federal Reserve Chair Jerome Powell underscored the Fed’s focus on the struggling job market and said he thought that any worrisome surge in inflation would be unlikely. Read the full story.