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Jobless Claims Fall Slightly to 837,000 As Coronavirus Continues to Impact Economy

NATIONWIDE — Nearly 7 months after the coronavirus pandemic hit the United States, the economy is still struggling to recover. 

Though jobless claims fell to 837,000 last week, from 870,000 the week prior, major companies announced this week that they are cutting thousands of jobs as the COVID-19 pandemic impacts industries like tourism and restaurants.

What You Need To Know

  • Jobless claims fell to 837,000 last week, down from 870,000 the week before
  • This week’s report relies on estimates for claims in California as the state deals with a backlog of 600,000 in its system, and the number will be revised when the state completes its review 
  • Major companies announced major layoffs this week, including Disney, Allstate and major airlines
  • The government will issue its September jobs numbers Friday, the final such report before Election Day

The Walt Disney Company announced they are laying off 28,000 U.S. workers, across its Parks, Experiences and Products division, which includes not only theme parks Walt Disney World and Disneyland, but also their resorts, Disney Cruise Line and shopDisney.

Allstate said it will shed 3,800 jobs — 7.5% of its workforce.

And tens of thousands of airline workers will lose their jobs this month as federal aid to the airlines expires. The airlines were barred from cutting jobs as long as they were receiving the government assistance.

According to the Labor Department’s report, which was released Thursday, companies are still cutting a historically high number of jobs, though the weekly numbers have become less reliable as states have increased their efforts to root out fraudulent claims and process earlier applications that have piled up.

This week’s report also relies on estimates for claims in California as the state deals with a backlog of 600,000 in its system. The Labor Department will revise its number once California completes its review.

The Labor Department said the number of people who are continuing to receive benefits fell to 11.8 million, extending a steady decline since spring. That suggests that many of the unemployed are being recalled to their old jobs.

But it also reflects the fact that tens of thousands of jobless Americans have exhausted their regular state unemployment benefits. Some of them are likely transitioning to an extended jobless aid program that provides benefits for an additional three months.

Weekly applications for unemployment benefits are typically watched as a proxy for layoffs, although the data has become muddied in recent months. The flood of laid-off workers during the pandemic recession overwhelmed state agencies.

Congress also made millions of contractors and self-employed people eligible for jobless aid for the first time through a new program that is managed by state agencies. This program has further burdened the states.

The states’ efforts to clear backlogs and uncover fraud in the new program have made it harder to interpret the government’s report on unemployment benefits. Many economists no longer consider it a clear sign of the pace of layoffs.

Initial jobless claims are stuck above the highest levels reached in the 2008-2009 Great Recession. But last week, economists at Goldman Sachs noted that according to other government data, layoffs have fallen below the peaks of a decade ago.

On Friday, the government will issue the jobs report for September, the final such report before Election Day, Nov. 3. Analysts have forecast that it will show a gain of 850,000, which would mark the third straight monthly slowdown in job growth. It would mean that the economy has regained just over half the 22 million jobs that were lost to the pandemic.

The unemployment rate is expected to decline from 8.4% to 8.2%, according to data provider FactSet.

The Associated Press contributed to this report.

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