Unemployment Claims Drop, but Holiday Week May Be a Factor

The absence of additional aid has caused many economists to ratchet down their economic forecasts. Mike Gapen, chief U.S. economist at Barclays, sees virtually no growth in the first quarter of 2021, followed by a rebound as mass vaccinations begin and consumer behavior returns to normal.

Indeed, there are some hopeful indicators alongside the job market gloom: a booming stock market, brisk sales of new and existing homes, and reasonably healthy spending going into the holiday shopping season.

But until the pandemic is under control, those factors will be overwhelmed by official restrictions on businesses and reluctance to engage in activities like travel or indoor dining.

“I think the economy is on a solid footing, but we may just hit a couple of bumps between now and the end of the first quarter,” Mr. Gapen said. “Stimulus would be helpful, of course.”

To make matters worse, the surge in Covid-19 cases has brought on a wave of hospitalizations that threatens to overwhelm the health care system and force a return to the stay-at-home orders imposed last spring. California, for example, is considering another lockdown to stem the pandemic’s spread, a move that would have broad implications.

Already, other hard-hit states are seeing extensive layoffs. Illinois reported nearly 19,000 initial claims for unemployment insurance in the week ending Nov. 21, while Michigan said there were more than 17,000 filings. In both states, hotels and restaurants were among the most affected industries.

Joshua Shapiro, chief U.S. economist at the consulting firm MFR, noted that the highest weekly tally ever for jobless claims before the pandemic was 695,000 in 1982, well below last week’s total.

Article source: https://www.nytimes.com/2020/12/03/business/economy/unemployment-claims.html