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US jobless claims climb for first time in 5 weeks, to 353,000

Unemployment lineBryan Woolston/Reuters

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Filings for unemployment insurance jumped from pandemic-era lows last week as the country crept closer to the expiration of federal UI aid.

Weekly jobless claims reached an unadjusted 353,000 last week, the Labor Department announced Thursday morning. That compares to a median estimate of 350,000 claims from economists surveyed by Bloomberg.

The print interrupts four straight weeks of declines. The previous week's count was revised to 349,000 from 348,000 and still marks the lowest reading since the pandemic drove claims higher.

Continuing claims, which count Americans actively receiving unemployment benefits, fell to 2.86 million for the week that ended August 14. That missed the median estimate of 2.76 million claims. Continuing claims set a pandemic low that week and have generally declined more consistently than weekly claims.

 

 

While claims sit far lower than they did just months ago, they remain nearly twice their pre-pandemic levels. Weekly counts have been among the most closely watched indicators of the labor market's recovery, despite their volatile nature.

The latest reading also comes mere weeks before the federal boost to UI lapses. A handful of programs created by Congress have augmented weekly benefits payouts since the pandemic began early last year, but they're set to expire in September. The Biden administration reiterated earlier this month it would let the programs expire, and Democrats are unlikely to extend the benefit further.

Twenty-six states announced plans to prematurely slash the benefit, with many arguing the move would push more jobless Americans into the workforce.

Yet a new study suggests the early cuts did more harm than good. Researchers at University of Massachusetts Amherst, Harvard University, Columbia University, and University of Toronto found the reduction of benefits drove a 20% drop in recipients' weekly spending and did little to improve hiring, with only 4.4% more workers in early-out states taking jobs compared to peers in states that kept benefits.

"Clearly, if it had been the case that more people losing benefits were easily able to transition into paid work, you wouldn't see that sort of reduction and sharp reduction in spending, but that's what you saw," Arindrajit Dube, an economics professor at UMass Amherst and of the paper's authors, told Insider's Juliana Kaplan.

The Brookings Institute joined some Democrats and millions of unemployed Americans on Wednesday in arguing for an extention of the federal support. There is little evidence the boosted benefits are behind the labor shortage, Annelies Goger, a fellow at Brookings' Metropolitan Policy Program, said in a report. The premature cutoff also stands to worsen economic inequality at a time when the recession's fallout is already extremely uneven, she added.

"This return to 'normalcy' will penalize many of the workers who the pandemic impacted most severely," Goger said.

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