The number of Americans filing for first-time unemployment claims fell slightly to 847,000 last week, according to data released Thursday by the Department of Labor. Economists had predicted a total of 875,000 claims for the week ended Jan. 23.
Ten months into the pandemic, the weekly figure — which is a proxy for layoffs — continues to hover just below 1 million. That's five times higher than its pre-pandemic average, though far lower than the March peak of 7 million.
"Thanks to Covid-19, there are still 10 million jobs missing from the economy, and there are still 14.5 million people claiming unemployment benefits. People need help," said Dan North, chief economist at Euler Hermes North America. "Maintaining stimulus spending, in particular, income support, has been the right thing to do all along and it still is."
With the economic pain far from subsiding, President Joe Biden has laid out a $1.9 trillion relief package that focuses on a new round of stimulus checks to help struggling Americans, as well as an ambitious vaccine distribution plan to help control the deadly pandemic.
"There's nothing more important to the economy now than getting vaccinated," Federal Reserve Chair Jerome Powell said on Wednesday in a news briefing that highlighted the economic slowdown.
In a statement released on Wednesday at the conclusion of its two-day meeting, the Federal Open Market Committee, the Fed's policymaking group, said: "The path of the economy will depend significantly on the course of the virus, including progress on vaccinations."
In a recent report on the global economy, Gita Gopinath, director of research at the International Monetary Fund, wrote: "If vaccines and therapies remain effective against new virus strains, we may be able to exit this crisis with less scarring than was feared."
"The burden of the crisis has fallen unevenly across groups and has increased inequality," wrote Gopinath. "Workers with less education, youth, women and those informally employed have suffered disproportionate income losses. Close to 90 million individuals are expected to enter extreme poverty over 2020–21, reversing the trends of the past two decades."
GDP data released Thursday by the Bureau of Economic Analysis underscores an increasing fragmentation. Gross domestic product increased at an annualized rate of just 4 percent in the fourth quarter of 2020, marking the worst year since 1946. However, the data also showed the largest annual increase in disposable personal income since 1984.
"After soaring GDP growth during the third quarter of 2020, we’ve seen only a continuation of the K-shaped economic recovery and the escalating inequality that comes with it," said Steve Rick, chief economist at CUNA Mutual Group. "Until we start to make notable progress in closing these gaps, true and sizable GDP gains for the country as a whole will face notable headwinds."
