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A glimmer of hope: ‘Only’ 730,000 Americans filed for jobless claims last week

Another 730,000 American workers filed for first-time unemployment benefits, adjusted for seasonal swings, last week, the Labor Department reported Thursday.

That was far fewer than economists had predicted, and a massive 111,000-claim drop from the prior week’s number of applications.

The decline was mostly due to sharp drops in applications filed in California and Ohio. In Texas, where extreme winter weather led to power and water outages, claims also declined by more than 7,000 applications.

The Ohio and Texas drops were “due to the deep freeze that settled in across the country,” said Joe Brusuelas, chief economist at RSM, though that didn’t explain the much larger decline in warmer California.

“Whatever the case, there is always holiday and weather induced distortions this time of the year in jobless claims data, so investors should anticipate a rise in clams over the next two weeks,” he said.

Despite the surprising drop, the labor market is still not close to being back on its feet nearly a year into the pandemic. For the past six months, weekly state unemployment claims have been below a million, but never fell lower 711,000 set in November.

On top of that, 451,402 people not eligible for regular state claims, such as the self-employed or gig workers, filed for Pandemic Unemployment Assistance. This number is not seasonally adjusted.

Added together, first-time claims stood at 1.2 million without seasonal adjustments last week.

“For months, there’s been no substantial improvement in the magnitude of total initial claims,” said Indeed Hiring Lab economist AnnElizabeth Konkel in emailed comments. Despite changes in the direction claims are trending, the total number of initial applications is still nearly six times higher than in the same period last year.

Continued claims for jobless benefits stood at 4.4 million in the week ended February 13, a slight decrease from the prior week.

In the week ended February 6, more than 19 million Americans received benefits under the government’s various programs. The number of workers receiving aid through the Pandemic Emergency Unemployment Compensation program, which provides additional weeks of payments after workers have exhausted their regular state benefits, climbed by more than a million to 5.1 million.

“Hopefully the upcoming spring weather and continued vaccinations will be an economic boost,” Konkel said.

For states, the long-term joblessness of so many people is a growing financial burden. As of Tuesday, some 19 states borrowed more than $50 billion from the federal government to pay out benefits, according to the US Treasury.

California has borrowed $19.5 billion, while New York has borrowed just under $10 billion. Texas has borrowed about $6.5 billion.

–Tami Luhby contributed to this story.

Article Topic Follows: Money

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