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Jobless claims jump to 853K as record coronavirus cases hinder economy

Jobless claims jump to 853K as record coronavirus cases hinder economy
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The number of new applications for unemployment insurance surged last week to 853,000, a jump of more than 100,000 from the previous week, amid record-high coronavirus cases that are slowing economic growth.

In the week ending Dec. 5, initial weekly jobless claims rose by 137,000 from a revised total of 716,000 applications. The non-seasonally adjusted number of claims totaled 947,504 last week, rising by 228,982, according to data released Thursday by the Labor Department. 

Another 427,609 people applied for Pandemic Unemployment Assistance (PUA), a program created to expand jobless benefits to contractors, gig workers and others who do not typically qualify for traditional unemployment insurance. More than 19 million Americans were on some form of jobless aid as of Nov. 21, according to the Labor Department.

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"This recent surge suggests that claims are not just stagnating; they're actively worsening. The surge in initial claims is especially concerning when claims are still above levels near the peak of the Great Recession," wrote Daniel Zhao, senior economist at Glassdoor, in an analysis.

While the weekly jobless claims data can often be distorted by state backlogs, the sharp rise last week appears to be a troubling sign for the U.S. economy as the country suffers through record-breaking coronavirus cases, hospitalizations and deaths. 

"The Thanksgiving holiday may still be wreaking some havoc with the data, but the underlying picture is still one of weak labor market conditions as the coronavirus surges," wrote Nancy Vanden Houten, lead U.S. economist at Oxford Economics, in an analysis.

The figures could give another jolt to talks in Washington on a coronavirus relief package.

The White House and congressional leaders are attempting to strike a deal on another round of up to $916 billion in pandemic response and economic relief, but have made limited progress. The looming expiration of several unemployment aid programs created by the CARES Act has been a major sticking point in negotiations.

The CARES Act added $600 to weekly state unemployment insurance payouts, created PUA, and provided another 13 weeks of support to workers who exhausted their state benefits. 

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While the $600 boost ended on July 31, the rest of those unemployment programs are set to expire on Dec. 31. Roughly 12 million people would lose their unemployment benefits by the day after Christmas, according to a study from The Century Foundation and Employ America, two progressive policy groups.

"Despite the prospects of widespread vaccine availability by next summer, weak economic data now puts increasing pressure on Congress to extend additional relief to bridge Americans over the next few months," Zhao wrote.

Updated at 9:27 a.m.