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Weekly jobless claims fall to 712,000, beating expectations

The economic situation is "an American tragedy," said former Federal Reserve Chair Janet Yellen, President-elect Joe Biden's nominee for Treasury secretary.
Image: New York City Braces For Increase In COVID-19 Cases
Sale signs are displayed in the window of a business in Brooklyn on Dec. 1, 2020 in New York City.Spencer Platt / Getty Images

The number of claimants for initial weekly jobless benefits fell last week to 712,000, as the labor market struggles to rebuild itself amid a continued surge in Covid-19 infections that has led to a new round of restrictive measures.

The data, released Thursday by the Department of Labor, beat economists' expectations of 780,000 claims. In the prior week, total claims had ticked up sharply to a newly revised 787,000.

While claims remain well below the pandemic peak of 7 million in March, the weekly totals continue to represent three times the pre-pandemic average, and have never dipped below the Great Recession peak of 665,000.

In the wake of record rise in daily deaths from the virus, Centers for Disease Control and Prevention Director Dr. Robert Redfield issued a sober message on Wednesday, urging stricter adherence to safety precautions in order to slow the spread of the disease.

"I actually believe [the winter months] are going to be the most difficult time in the public health history of this nation,” he said.

Millions of Americans disregarded advice from public health officials to stay home for Thanksgiving, choosing instead to travel to visit family.

The United States set three grim records on Wednesday, recording the highest number of daily deaths, new infections and hospitalizations since the pandemic began.

The worsening public health outlook comes as millions of unemployed Americans are set to lose their benefits at the end of the year as emergency federal assistance expires.

Former Federal Reserve Chair Janet Yellen, President-elect Joe Biden's nominee for Treasury secretary, described the situation Tuesday as "an American tragedy."

If the emergency pandemic programs were to be reinstated, the economy "would be boosted by 3.5 percent, and 5.1 million more jobs would be added in 2021," said Economic Policy Institute Senior Economist Elise Gould and Director of Research Josh Bivens, in a report released Wednesday.

"If the effective safety net functions provided by these programs were maintained through 2021, millions of workers would be better able to avoid economic catastrophe while out of work due to the pandemic," they concluded.

In the Federal Reserve's most recent "Beige Book," which surveys economic conditions across the U.S., many businesses said they feared "employment levels would fall over the winter before recovering further," due to the increase in infections.

"The sharp rise in Covid-19 cases has precipitated more school and plant closings and renewed fears of infection, which have further aggravated labor supply problems, including absenteeism and attrition. Providing for childcare and virtual schooling needs was widely cited as a significant and growing issue for the workforce, especially for women," according to the report, released Wednesday afternoon.

On Monday, the Government Accountability Office said the Department of Labor has been miscounting and underpaying people receiving unemployment benefits from emergency pandemic programs. Instead of providing compensation based on previous pay, some states have only been paying the basic minimum — which has likely led to additional and unnecessary economic hardship.

"Even with inaccuracy, the ballpark size of total initial claims underscores that Covid-19 continues to inflect deep economic pain," said AnnElizabeth Konkel, economist at Indeed Hiring Lab. "With record virus cases combined with few outdoor options for businesses because of winter, the pain will continue."

Focus now turns to Friday's monthly employment report from the Bureau of Labor Statistics, the first jobs report since Biden won the White House. Economists predict the economy gained just 450,000 jobs in the last month, leaving at least 9.5 million positions yet to be recovered.