Jobless Claims Jump to 853,000, Far Worse than Expected

New weekly jobless claims jumped 137,000 to 853,000 in the week that ended December 5, the Department of Labor said Thursday. That is far worse than expected.

Economists had forecast 724,000. The prior week was initially estimated at 712,000, the first decline after two weeks of rising claims, and was revised up to 716,000. Many economists think that decline was due to the Thanksgiving holiday, when many employers hold back from laying off workers and some workers do not bother applying for benefits until after the holiday.

Jobless claims can be volatile week to week so many economists prefer to look at the four-week average. This rose by 35,000 claims to 776,000.

Jobless claims—which are a proxy for layoffs—remain at extremely high levels. Prior to the pandemic, the highest level of claims was 695,000 hit in October of 1982. In March of 2009, at the depths of the financial crisis recession, jobless claims peaked at 665,000.

Even when the economy is creating a lot of demand for workers, many businesses will shed employees as they adjust to market conditions. But in a high-pressure labor market, those employees quickly find jobs and many never show up on the employment rolls. What appears to be happening now is that many workers who lose their jobs cannot quickly find replacement work and are forced to apply for benefits.

Claims hit a record 6.87 million for the week of March 27, more than ten times the previous record. Through spring and early summer, each subsequent week had seen claims decline. But in late July, the labor market appeared to stall and claims hovered around one million throughout August, a level so high it was never recorded before the pandemic struck. Claims moved down again in September and hade made slow, if steady, progress until the election.