Unemployment claims show continuing pressure on the economy

New claims for state unemployment remain stubbornly high as the labor market struggles to regain momentum after the winter surge in coronavirus cases.

A total of 862,000 workers filed initial claims for state unemployment benefits last week, roughly the same number as the week before, the Labor Department said Thursday, while 516,000 new claims were filed for Pandemic Unemployment Assistance, an emergency federal program for freelancers, part-time workers and others normally ineligible for state jobless benefits. Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 861,000.

Economists had expected to see a steady downward trend in initial claims, but the report amounted to fresh evidence that the economic recovery’s momentum has stalled.

“We’re going in the wrong direction,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “It’s hard to get away from the fact that week after week we keep hoping for better and this is like a sucker punch.”

Particularly worrying was the rise in claims for Pandemic Unemployment Assistance, which jumped by 174,000 last week. The increase largely reflected a spike in claims in Ohio, most likely because of processing delays after the program was extended in federal relief legislation in December.

The Ohio Department of Job and Family Services said on Feb. 8 that “weekend system upgrades” had made the program available to more than 130,000 Ohioans “who have been waiting to receive these benefits” since December. It also enabled Ohioans to submit new applications.

In Massachusetts, about 17,100 individuals filed new claims for unemployment benefits last week, down roughly 2,500 from the week prior. Nearly 3,400 filed claims under the Pandemic Unemployment Assistance program, down about 900 from the previous week. Another 6,700 individuals filed claims under an extended benefits program, which provides up to 13 weeks of aid to those who exhausted traditional benefits, an increase of about 800 from the week prior.

Fraudulent claims for jobless aid in some states and other issues, including potential backlogs of claims, may be elevating the totals. Last week, for example, Ohio reported a huge increase in applications and said it had set aside about half that increase for further review out of concern about fraud.

Despite the challenges in the job market, there have been some positive signs for the economy in recent days. Retail sales surged 5.3 percent in January, a bigger gain than expected, though they were most likely powered by the latest round of stimulus checks and could dip again in February.

AnnElizabeth Konkel, an economist for the career site Indeed, said retail job postings on Indeed were up 2.6% from February 2020. Overall, job postings on the site are up 3.9 percent.

“We’re making progress, but there’s definitely still a ways to go,” Konkel said.

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