Initial Jobless Claims Drop, But Outlook Still Grim
Initial jobless claims were lower than expected last week, dropping to just over 800,000, even as a spike in COVID-19 cases slowed the economic recovery.
Initial claims, seen as a leading indicator for overall unemployment, dropped 89,000 to 803,000 in the week ended Dec. 19, the Department of Labor said Wednesday. Economists had expected an average of about 883,000, according to Moody’s Analytics.
Even with last week’s drop, the overall jobs picture is worrisome as the public health crisis and lack of government stimulus put the brakes on economic growth, economists said. Initial claims remained “stubbornly high” at over 800,000 for the third week in a row, according to Dante DeAntonio, a senior economist at Moody’s.
"Despite modest improvement, jobless claims continue to signal a labor market in distress,” DeAntonio wrote in a research note.
In fact, as some stores and restaurants are forced to close for good, December could be the first month since April without at least some job growth, according to Diane Swonk, chief economist at Grant Thornton.
“The economy is slowing in response to the surge in COVID cases,” Swonk wrote in a research note Wednesday. “The risk is that we slow further in response to another uptick in cases following the Christmas holiday.”