With states rolling out a new round of federal unemployment benefits, the number of Americans filing new claims last week shot up by more than any other week of the coronavirus pandemic.
Approximately 965,000 people filed their first unemployment claims for the week ending Jan. 9, an increase of 181,000 from the week before. That’s the largest total number since Labor Day, and the largest week-to-week increase since the pandemic struck the American economy last March.
To put that one-week leap of 181,000 in perspective: It’s not much lower than 207,000, which was the total number of Americans filing new unemployment claims during the same week a year ago, in January 2020.
In Florida, the number of workers filing new claims also shot skyward. According to the U.S. Department of Labor, 75,444 Floridians filed initial claims last week, a leap of more than 50,000 from the week before. Only Illinois saw a higher statewide increase.
The new data represents the first full week of claims filed since most states began implementing new unemployment benefits outlined in the new $900 billion relief and stimulus package. They include extensions of benefits for gig workers, the self-employed and people whose state insurance had expired, as well as weekly $300 checks expected to last into March.
The stimulus package pumped millions of dollars into Florida. This week, the state surpassed $20 billion dispersed to unemployed workers during the pandemic, a number that has since rapidly grown. As of Thursday, the state had handed out $20.2 billion, most of it in federal money, to 2.18 million workers.
On Thursday, the American Bankers Association’s Economic Advisory Committee announced it was forecasting steady growth throughout 2021 for the American economy at large, but that the labor market is unlikely to return to pre-pandemic levels until 2024.
“Businesses are generally cautious in hiring and investing following periods of high uncertainty,” said Beata Caranci, senior vice president and chief economist at TD Bank Group. “There’s a high potential for business failures to materialize as income supports fade.”
Caranci said a number of factors could accelerate or decelerate rehiring trends. If a vaccine is successful and widespread, it could spur people with more discretionary wealth to spend more in “the areas that have exactly been displaced by the pandemic — leisure, recreation, restaurants.”
On the other hand, if the vaccine isn’t deployed smoothly and evenly throughout 2021, “you could extend these dislocations in the market where these temporary job (losses) become permanent,” she said.
The political unrest in Washington D.C. in the week leading up to Joe Biden’s presidential election could also have an impact, Caranci said.
“There is agreement it layers further uncertainty onto an already risk-filled environment, and that uncertainty can dampen near-term prospects,” she said. “A higher uncertainty is not a friend of business confidence.”