New US jobless claims drop to 787,000 as stimulus talks stall

New claims for United States jobless benefits fell to 787,000 last week, the Labor Department said on Thursday, October 22, as congressional negotiations over a new economic stimulus package lost momentum. 

The big improvement brought claims below 800,000 for the second time since the pandemic started, with new seasonally adjusted applications falling 55,000 in the week ended October 17 and the previous week’s data revised down by 56,000.

But the weekly claims remain well above the single worst week of the 2008-2010 global financial crisis after businesses shutdowns beginning in March to stop COVID-19 sent them spiking into the millions.

The surge has since receded but economists say the US economy needs more stimulus spending to recover. 

Democrats and Republicans in Washington have negotiated for months on a new measure to help that after key provisions of the $2.2-trillion CARES Act expired, and on Thursday, House Speaker Nancy Pelosi indicated the two sides were still at an impasse ahead of the November 3 election.

“We continue” negotiations, “And I am hopeful that we will be able to reach an agreement,” the Democratic leader said, adding she was “close” with Republicans on a new bill.

The House wants to spend $2.2 trillion while President Donald Trump has offered a measure costing $1.9 trillion. But besides the headline figure, Pelosi acknowledged negotiators hadn’t resolved disagreements over liability protections for businesses and funding for state and local governments – key bones of contention in any deal.

‘Worrisome situation’

The Labor Department data showed 345,440 people, not seasonally adjusted, filing claims last week under a program implemented during the pandemic for people who would not normally be eligible for aid, bringing the total new filings for the week to around 1.1 million.

All told, approximately 23.2 million people were receiving benefits under all unemployment aid programs as of the week ended October 3, a drop of around one million from the week prior.

“With fiscal relief package hopes dimming, this situation is worrisome,” Gregory Daco of Oxford Economics tweeted.

The insured unemployment rate indicating people actually receiving regular benefits dropped to 5.7%, according to the data. But analysts say that didn’t indicate people returning to work but rather using up all of their regular benefits and moving to the Pandemic Emergency Unemployment Compensation program.

Nearly 510,000 additional people as of October 3 started receiving benefits under that program, which provides an extra 13 weeks of payments.

Robert Frick of Navy Federal Credit Union warned the nearly 3.3 million total people in that program “are in danger of falling into the ranks of the permanently unemployed.”

The Thursday report was the first to include updated data for California after the state paused reporting for a few weeks to address a backlog. – Rappler.com