U.S. Unemployment Claims Expected to Keep Easing

Weekly claims have increased since November, when they were below 800,000, to reach 927,000 during the week of Jan. 9. Current levels remain well above the pre-pandemic peak of 695,000 and are higher than in any previous recession for records tracing back to 1967.

“I think this winter is going to be particularly tough on the job market,” said Ryan Sweet, an economist at Moody’s Analytics. “The path of the economy is tied to the hip of the pandemic.”

Cold weather, a surge in Covid-19 case numbers and the threat of new, highly contagious variants of the virus have contributed to a broader winter slowdown that has hindered the labor market’s recovery in recent weeks, economists say.

Services industries, particularly leisure and hospitality, have struggled to recover as the virus continues to limit in-person businesses. Manufacturing, meanwhile, a smaller part of the U.S. economy, has become a bright spot as demand for goods picks up. The Congressional Budget Office this week said it could take several years for the number of employed workers in the U.S. to return to its pre-pandemic peak.

“The easy part of the labor market recovery is over,” Mr. Sweet said, adding last summer’s big jobs gains were due in part to initial reopenings of businesses that had shut down in the aftermath of the outbreak. The labor market lost jobs in December for the first time in seven months.

Christine Fitzgerald, 56 years old, of Berlin, Conn., was laid off from her job as a marketing manager after her employer, an insurance company, was acquired last spring. She is still looking for work and has been a finalist for about seven positions, she said, all of which eventually fell through.

“It becomes, ‘How are you going to reinvent yourself?’ ” Ms. Fitzgerald said. She recently completed a professional development course on transferring her experience in corporate marketing to the nonprofit sector.

Ms. Fitzgerald filed for unemployment aid in late April, which she has used to help cover bills and support her two daughters, one in high school and the other college. She said competition for a job has been fierce—one online job posting had more than 7,000 applicants. “There’s a lot of talent on the street right now,” she said.

Economists expect the labor market to improve this year as vaccines help ease the pandemic and the government provides additional support for the economy. Congress is also considering as much as $1.9 trillion in additional financial aid to help households and businesses. The proposal would bolster unemployment aid, provide funds for vaccine distribution and send $1,400 checks to many Americans.