New US jobless claims tick down to 803,000 but remain elevated

The number of Americans applying for unemployment benefits slid last week to 803,000, but remained at elevated levels as efforts to curb a resurgence of coronavirus cases continued to drag on the US labour market. 

Weekly jobless claims decreased by 89,000 in the week ending December 19, compared with the previous week, when claims were revised higher to 892,000, the labour department said on Wednesday. Economists had expected claims to dip to 880,000. 

That came alongside a decline of 56,960 in claims for federal pandemic unemployment assistance (PUA) to 397,511, the labour department said.

There were 5.3m Americans actively collecting state jobless aid as of December 12, a decrease of 170,000 from a week before. Economists cautioned this could have been driven by the exhaustion of benefits by some unemployed workers, rather than people finding new work.

About 20.4m people continue to receive unemployment benefits of some kind nine months after the pandemic began.

The virus is rampant across the US with new cases and hospitalisations hitting record numbers in some parts of the country, while the death toll has passed 300,000. And there are fears the country will miss its target of inoculating 20m people by the end of the year.

Congress this week approved a $900bn stimulus package that includes nearly $300bn in small business relief, a new round of direct payments of up to $600 for American adults, and $300 a week in extra unemployment benefits until mid-March.

However, on Tuesday night, US president Donald Trump rejected the stimulus bill, saying the landmark economic relief package was a “disgrace” while calling for higher direct payments and less money for foreign aid.

Lawmakers hope the second-largest economic relief bill in American history will help cushion the blow to the economy until the rollout of the vaccine enables the easing of restrictions. 

The potential stimulus cheques come as personal incomes fell 1.1 per cent in November from the previous month and household spending declined 0.4 per cent.

Economists argue that the latest relief bill has come too late to avoid a big slowdown in the labour market and a reduction in consumer spending, meaning that president-elect Joe Biden will inherit a weak economy when he takes office next month. 

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