Jobless claims rise less than expected at 847,000 first-time applicants

The number of Americans who filed for unemployment benefits for the first time rose less than expected last week as the Biden administration took the reins of the Covid vaccine rollout and employers hoped for additional financial support from Congress.

Jobless claims totaled 847,000 for the week, the Labor Department reported Thursday. Economists polled by Dow Jones had expected first-time claims to total 875,000. The previous week’s level was revised up by 14,000 from 900,000 to 914,000.

Continuing claims showed a decrease, falling by 203,000 to 4.77 million, a new pandemic-era low. Some 5.05 million continuing claims were expected. U.S. stock futures turned higher ahead of Wall Street’s opening bell.

Still, the latest claims report showed that the total of Americans receiving unemployment benefits actually rose, jumping to 18.28 million, an increase of 2.29 million from the prior week. That increase is related to the latest fiscal package passed in December, which included extended benefits for displaced workers.

The bounce in consumer spending that had revived job and economic growth through the summer and fall has shown signs of fatigue, as household spending declined for the first time in seven months in November.

That slowdown, thought to be a function of colder weather and record-setting Covid cases, has led to a string of higher-than-expected jobless claims and stagnant unemployment figures.

State and local governments have in some locations reintroduced business restrictions to help slow the spread of the virus, which has hit hotels, bars, restaurants and casinos hard. In January alone, the industry lost 498,000 workers.

Initial claims hit 926,000 during the week ended Jan. 9, the highest reading since August.

President Joe Biden and his administration have cited the anemic employment reports in stressing the urgency of a proposed $1.9 trillion stimulus package.

The president’s plan would include a number of provisions that could help unemployed Americans until the jobs market recovers and vaccines are more widely available.

Biden’s plan includes $1,400-per-person direct payments to most households, a $400-a-week unemployment insurance benefit through September, expansion of the child tax credit and a $15 per hour minimum wage. 

Investors also received their first look at fourth-quarter GDP on Thursday, which showed that the U.S. economy grew at an annualized rate of 4% in the final three months of 2020.