U.S. Jobless Claims Increase to 742,000 as Pandemic Worsens

WASHINGTON (AP) -
A man wears a mask while walking under a Now Hiring sign at a CVS Pharmacy, during the coronavirus outbreak in San Francisco. (AP Photo/Jeff Chiu, File)

The number of Americans seeking unemployment aid rose last week to 742,000, the first increase in five weeks and a sign that the resurgent viral outbreak is likely slowing the economy and forcing more companies to cut jobs.

The Labor Department’s report Thursday showed that applications for benefits rose from 711,000 in the previous week. Claims had soared to 6.9 million in March when the pandemic first intensified. Before the pandemic, applications typically hovered at about 225,000 a week.

The economy’s modest recovery is increasingly at risk, with newly confirmed daily infections in the United States having exploded 80% over the past two weeks to the highest levels on record. More states and cities are issuing mask mandates, limiting the size of gatherings, restricting restaurant dining, closing gyms or reducing the hours and capacity of bars, stores and other businesses. At least 15 states have tightened curbs on businesses to try to slow infections.

Evidence is emerging that consumers are losing confidence in the economic outlook and pulling back on shopping, eating out and other activities. Spending on 30 million credit and debit cards tracked by JPMorgan Chase fell 7.4% earlier this month compared with a year ago. That marked a sharp drop from two weeks earlier. Consumer sentiment also declined in early November and is down nearly 21% from a year ago, according to a University of Michigan survey.

The number of people who are continuing to receive traditional unemployment benefits fell to 6.4 million, the government said, from 6.8 million. That shows that more Americans are finding jobs and no longer receiving unemployment aid. But it also indicates that many jobless people have used up their state unemployment aid — which typically expires after six months — and have transitioned to a federal extended benefits program that lasts 13 more weeks.

The worsening viral outbreak coincides with the impending expiration of two federal unemployment programs at year’s end that could eliminate benefits for 9.1 million people, according to a report from The Century Foundation. Congress has so far failed to agree on any new stimulus package for jobless individuals and struggling businesses. The cutoff of aid will sharply reduce income for the unemployed, force a further reduction in their spending and perhaps weaken the economy.

One of those programs is Pandemic Unemployment Assistance, which made self-employed and contract workers eligible for unemployment aid for the first time. PUA was established by a multi-trillion-dollar aid package that Congress enacted in the spring.

The second measure in the stimulus package provided the additional 13 weeks of benefits for unemployed people who have used up their state benefits.

When those two programs expire on Dec. 26, the Century Foundation estimates that 12 million people will lose their benefits. About 2.9 million might be able to transition to a state extended benefit program that can last from six to 20 weeks, the report said. But the rest will lose benefits that average about $320 a week nationally.

The expiration of benefits will make it harder for the unemployed to make rent payments, afford food or keep up with utility bills. Most economists agree that because unemployed people tend to quickly spend their benefits, such aid is effective in boosting the economy.