California’s economy ended 2020 on a bleak note with a new jump in unemployment claims amid widening worries about the spread of COVID-19 and business shutdowns to battle the deadly virus.
Initial claims for unemployment benefits in California totaled 167,600 for the week ended Dec. 26, an increase of about 9,000 from the 158,700 in first-time jobless claims filed the prior week, the U.S. Labor Department reported Thursday.
The California increase ran contrary to the nation, where jobless claims fell. U.S. initial unemployment claims totaled 787,000 last week, down 19,000 from 806,000 the prior week, the Labor Department reported.
While at the lowest level in four weeks, the U.S. figures are nearly four times higher than last year at this time before the coronavirus struck. Employers continue to cut jobs as rising infections keep many people at home and state and local governments re-impose tighter restrictions on businesses and public activities.
Jobless claims were running around 225,000 per week before the pandemic struck with force last March when weekly jobless claims surged to 6.9 million and sent U.S. economy into a deep recession.
The total number of people receiving traditional unemployment benefits fell by 103,000 to 5.2 million for the week ending Dec. 19. That’s still far greater than the 1.7 million a year ago when the unemployment rate was hovering around a half-century low of 3.9%.
Unemployment claims peaked in May at 25.9 million.
The four-week average for claims which smooths out weekly variations rose last week to 836,750, an increase of 17,750 from the previous week.
Economists believe that the holidays, in addition to broad confusion over the status of a COVID-19 relief package, suppressed applications for benefits last week, so the numbers may be worse than they appear.
“While prospects for the economy later in 2021 are upbeat, the economy and labor market will have to navigate some difficult terrain between now and then and we expect (jobless) claims to remain elevated,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
Since government-mandated business lockdowns began in mid-March, California workers have filed 10.8 million initial claims for unemployment.
The most recent claims in California also reflect a rising pattern. A four-week moving average that economists use to smooth out weekly volatility, such as the sharp one-time drop for the week that ended Dec. 19, points to higher claims over the most recent one-month period.
Over the four weeks that ended on Dec. 26, California’s initial claims averaged 167,600 a week. That was up 9,300 from the weekly average for the four weeks that ended on Dec. 19, this news organization’s analysis of the claims reports shows.
“While the job prospects for 2021 are brighter, it will take the first half of the year for that momentum to build,” said Greg McBride, chief financial economist at Bankrate. “Elevated unemployment will be with us long after the virus is vanquished.”
Source: Orange County Register
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