Unemployment claims drop to 787,000

Initial unemployment claims fell to 787,000 for the week ending Dec. 26, dropping below 800,000 for the first time in a month, according to Labor Department data released Thursday.

The seasonally adjusted figure was a drop of 19,000 from the previous week, which itself was revised upward by 3,000. It also came in well below the expectations of economists, who predicted claims would rise to 828,000.

Unadjusted data showed 841,111 claims, a drop of 12,655, or 1.4 percent. Another 308,262 people applied for Pandemic Unemployment Assistance, an expanded emergency program offering benefits to the self-employed and gig economy workers, a decline of more than 88,000 from the previous week.

While claims remained historically high, and well above the weekly pre-pandemic record, the declines were welcome news for an ailing job market.

Claims had fallen below 700,000 in late October for the first time since the pandemic started but roared back up a month later as new COVID-19 cases exploded around the country.

In a lagging indicator of claims, a total of 19.5 million claims were filed in the week ending Dec. 12. By contrast, the year opened with just 1.83 million people filing continued claims.

“A year to forget will be anything but for the 19.5 million Americans collecting some form of unemployment compensation as of mid-December,” said Bankrate Chief Financial Analyst Greg McBride.

“While the job market prospects for 2021 are brighter, it will take the first half of the year for that momentum to build. Elevated unemployment will be with us long after the virus is vanquished.”

The 19.5 million claims included 13.2 million people who were getting benefits through two new programs created in the spring that were set to expire this week.

President Trump’s belated signing of the COVID-19 relief bill Sunday that extended the programs technically allowed them to lapse a day earlier, raising concerns that people would lose all income for at least a week.

A last-minute legal workaround from the Labor Department allowed states to offer continued benefits, though some states say there will still be a gap in benefits.

Andrew Stettner, a labor expert at the left-leaning Century Foundation, said the government would need to redouble efforts to extend and expand benefits, including a $300 increase in across-the-board benefits, beyond their March 14 deadline.

“While Congress has taken the first steps to avert the worst of the unemployment crisis, the need for additional jobless aid won’t end as the year turns over,” he said.