751,000 seek US jobless benefits as virus hobbles economy


The number of Americans seeking unemployment benefits fell slightly last week to 751,000, a still-historically high level that shows that many employers keep cutting jobs in the face of the accelerating pandemic.

A surge in viral cases and Congress’ failure so far to provide more aid for struggling individuals and businesses are threatening to deepen Americans’ economic pain. Eight months after the pandemic flattened the economy, weekly jobless claims still point to a stream of layoffs. Before the virus struck in March, the weekly figure had remained below 300,000 for more than five straight years.

Thursday’s report from the Labor Department said the number of people who are continuing to receive traditional unemployment benefits declined to 7.3 million. That figure shows that some of the unemployed are being recalled to their old jobs or are finding new ones. But it also indicates that many jobless Americans have used up their state unemployment aid — which typically expires after six months — and have transitioned to a federal extended benefits program that lasts an additional 13 weeks.

The job market has been under pressure since the virus paralyzed the economy and has regained barely half the 22 million jobs that were lost to the pandemic in early spring. The pace of rehiring has steadily weakened — from 4.8 million added jobs in June to 661,000 in September. On Friday, when the government issues the October jobs report, economists foresee a further slowdown — to 580,000 added jobs — according to a survey by the data firm FactSet.

The financial aid package that Congress enacted in the spring included a $600-a-week federal jobless benefit and $1,200 checks that went to most adults, in addition to assistance for small businesses. All that money has run out. Without additional federal aid, millions of unemployed Americans likely will lose all their jobless benefits in coming weeks and months, probably forcing them to scale back their spending. And many small companies could go out of business.

In the meantime, new confirmed viral cases in the United States reached an all-time high of more than 86,000 a day, on average, in a sign of the worsening crisis that lies ahead for the winner of this week’s presidential election. By contrast, just two months ago, according to Johns Hopkins University, the seven-day rolling average for confirmed daily new cases was 34,000.

As temperatures fall, restaurants and bars will serve fewer customers outdoors. And many consumers may stay home to avoid infection. Dwindling business could force employers to slash more jobs during the winter.

The data firm Womply found that more businesses are shuttering in the face of a COVID resurgence and a potentially deteriorating economy: 21% of small businesses were closed as November began, it says, up from 20% in October, 19% in September, and 17% in August. And sales growth is slowing at the companies that are open.

A series of major corporations have announced layoffs recently. Last week, Exxon Mobil said it was slashing 1,900 jobs from its U.S. workforce. Chevron said it planned to cut a quarter of the employees at its recently acquired Noble Energy, with he pandemic sapping demand for fuel. Charles Schwab announced after completing its purchase of TD Ameritrade that it would cut 1,000 jobs from the combined company.

And Boeing said it would make deeper cuts to its workforce than originally planned. It has been losing money because the viral outbreak has depressed demand for new planes. Boeing expects to end the year with about 130,000 employees, down 30,000 from the start of this year — far more than the 19,000 reduction it had announced three months ago.

 As COVID-19 cases keep rising, the European Union’s executive commission lowered its forecast for the economic rebound from the coronavirus pandemic next year and said the economy wouldn’t reach pre-virus levels until 2023.

The regular autumn forecast foresees growth of only 4.2% in 2021 for the 19 countries that use the euro, instead of the previous estimate of 6.1%.

The downgrade comes as governments record increasing numbers of infections, sick people in hospitals, and deaths, and as they reimpose some restrictions on businesses and activity. The commission added a warning that the situation with the virus is so unpredictable means that its growth forecasts “are subject to an extremely high degree of uncertainty.”

“Output in both the euro area and the EU is not expected to recover its pre-pandemic level in 2022,” the commission said Thursday in a statement accompanying the forecast report.

The eurozone and the wider 27-country European Union economy saw a robust rebound in July, August, and September, following lockdowns and cautious consumer behavior in the first half of the year that crushed business activity. Third-quarter GDP increased by 12.7% from the previous quarter, the largest increase since statistics started being kept in 1995. That robust re-opening contributed to the commission raising its estimate for output for all of this year, now saying that the economy would shrink by only 7.8% this year instead of the earlier forecast for a drop of 8.7%.

EU Commission Vice-President Valdis Dombrovskis said that “This forecast comes as a second wave of the pandemic is unleashing yet more uncertainty and dashing our hopes for a quick rebound... But through this turbulence, we have shown resolve and solidarity.”

Dombrovskis cited the wide-ranging stimulus and economic assistance measures taken at the EU level, led by a recovery package that will dispense 750 billion euros in loans and grants to get the economy going again from 2021.

National governments have also enacted a range of business and worker support measures including tax breaks, loans, and paying wages for employees put on short hours so businesses don’t lay them off. The European Central Bank is pumping 1.35 trillion euros ($1.58 trillion) into the economy through regular bond purchases, a step aimed at keeping credit flowing affordable to businesses.

The recent darkening of prospects has led ECB President Christine Lagarde to say after the bank’s Oct. 28 meeting that there was “little doubt” that a policy review at the Dec. 10 meeting would lead to more central bank action to support the economy.

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