An additional 320,000 claims were processed for Pandemic Unemployment Assistance, the program for gig and self-employed workers.
About 20.3 million people are still claiming some form of unemployment insurance. The number of new claims has fallen from peaks in the spring but remains historically high. Claims have remained above the pre-pandemic record of 695,000, from 1982, for 35 weeks, although questions about backlogs, fraud and duplicate claims have complicated the data.
Economists say they are concerned about the continued high level of job losses more than eight months into the pandemic, as the virus surges anew.
“This is the beginning of the darkest part,” said Diane Swonk, chief economist at Grant Thornton. “We’re going to see continued high unemployment claims."
There are other warning signs for the economy. Credit card spending is on the decline. Reservations at restaurants, as measured by OpenTable data, have trended down in year-over-year comparisons in recent weeks. And the coronavirus caseload has surged past previous peaks in the pandemic, with forecasts for it to get worse before getting better through the winter.
“This could metastasize into a much more traditional recession, and those who have been able to work from home and not had to experience the pain of the broader economy may see those bubbles burst,” Swonk said.
Unemployment benefits that have kept so many families afloat are set to expire for many in December, after months of inaction by Congress, which established those deadlines in March when there were more hopes that the pandemic would be short-lived. An estimated 12 million people could lose unemployment payments on Dec. 26, potentially pushing many over the brink, if Congress is unable to pass a new stimulus bill before then.
Economists worry about the catastrophic effects of this expiration: households with little in the way of support or savings finding themselves in increasingly dire financial straits as the national eviction moratorium expires. Meanwhile, a contraction in household spending could threaten the economy at large.
Analyst Andrew Stettner estimates that 4.4 million people have already been pushed off the unemployment rolls.
The number of people on Pandemic Emergency Unemployment Compensation, a program made available to those who exhaust their state benefits, typically after about six months, continues to swell as the pandemic grinds on.
But that program, as well as the PUA, both expire Dec. 26.
Economists say that being unemployed for six months or more is linked to a lower well-being among the unemployed and their families. In terms of job loss, the longer unemployment persists, the more likely it is to be permanent.
“The sad reality is that the only time we’ve seen Congress come together since the global financial crisis and act is when the stock market is down,” Swonk said. “The loss of small business reduces dynamism in the economy. The reality is that I don’t wish for a stock market correction, but unfortunately Congress has been focused more on Wall Street than Main Street.”