The number of Americans filing first-time claims for jobless benefits increased further last week, suggesting an explosion in COVID-19 infections and business restrictions are boosting layoffs.
Still, the economy got off to a solid start in the fourth quarter, with consumer spending and business investment in equipment topping analysts’ expectations in October.
Businesses also reported a sharp rebound in profits in the third quarter.
That was, however, insufficient to lift the heavy cloud over the economy.
Personal income dropped last month and could decline further with about 13.6 million Americans due to lose government-funded unemployment benefits a day after Christmas.
The benefits, part of a more than $US3 ($A4.1) trillion government coronavirus relief package which has largely expired, contributed to record economic growth in the third quarter.
Another package is expected only after president-elect Joe Biden is sworn in on January 20.
Minutes of the Federal Reserve’s November 4-5 meeting showed officials discussed how the central bank’s asset purchases could be adjusted to provide additional support to the economy.
“The question is no longer whether the recovery will slow, it will,” said Joel Naroff at Naroff Economics in Pennsylvania.
“The real issue is by how much will it decelerate.”
Initial claims for state unemployment benefits increased 30,000 to a seasonally adjusted 778,000 for the week ended November 21, the Labor Department said.
Unadjusted claims jumped 78,372 to 827,710 last week.
Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.14 million people filed claims last week.
There were at least 20.5 million people collecting unemployment benefits in early November.