Jobless Claims Rise to 885,000 as Layoffs Soar Amid Virus Spike

The number of Americans filing first-time claims for jobless benefits unexpectedly increased last week as a relentless surge in new COVID-19 infections hobbled business operations, offering more evidence that the economy's recovery from the pandemic recession was faltering.

Initial claims for state unemployment benefits totaled a seasonally adjusted 885,000 for the week ended Dec. 12, compared to 862,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 800,000 applications in the latest week.

Jobless claims are above their 665,000 peak during the 2007-09 Great Recession, though they have dropped from a record 6.867 million in March.

The weekly unemployment claims report, the most timely data on the economy's health, followed in the wake of data on Wednesday showing retail sales declined for a second straight month in November.

The Federal Reserve on Wednesday kept its benchmark overnight interest rate near zero and pledged to continue pumping more money into the economy through asset purchases to fight the recession. Fed Chair Jerome Powell told reporters that the pace of economic improvement had "moderated" and that the road ahead remained "highly uncertain."

The United States is battling a fresh COVID-19 outbreak, with at least 16.7 million infected and more than 304,000 dead, according to a Reuters tally. State and local government have responded with renewed restrictions on businesses, while some consumers are avoiding crowded places like shopping malls, restaurants and bars. California, home to nearly 40 million people, imposed new tough stay-at-home orders last week.