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Jobless claims drop, but layoffs remain high Economists worry about coronavirus surge

WASHINGTON — The number of laid-off Americans seeking unemployment benefits fell last week to 787,000, a sign that job losses may have eased slightly but are still running at historically high levels.

Last week’s figure was down from 842,000 the previous week, the Labor Department said Thursday. The government also revised down the number of people who sought aid in the two weeks before that. The revised total for the week that ended Oct. 3 was 767,000, the fewest since the viral pandemic erupted in March, though still more than three times the levels that preceded the pandemic.

Economists welcomed the declines as evidence that the job market is still recovering from the pandemic recession. But some cautioned that the improvement could prove short-lived. With confirmed infections having neared 60,000 in the past week, the most since July, consumers have been unable or reluctant to shop, travel, dine out or congregate in crowds — a trend that has led some employers to keep cutting jobs. Several states are reporting a record number of hospitalizations from the virus.

“We doubt it will continue as COVID infections spread rapidly, pushing down demand for discretionary consumer services, especially in the hospitality sector,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, referring to the portion of the economy that includes hard-hit hotels, restaurants and bars.

The downward revisions in applications for unemployment aid reflect a sharp decline in California, which in recent months has accounted for one-fourth of the nation’s total jobless claims. California stopped processing new applications for two weeks while it implemented anti-fraud technology and sought to process a huge backlog. The state’s workforce agency is now reporting a 30% drop in the number of new applications compared with its earlier levels.

A drop that sharp suggests that the state’s previous figures had overstated layoffs and jobless claims in California. Many economists have grown skeptical of the accuracy of the government’s weekly figures.

That’s because of fraud and the concern that some states may be double-counting applicants in their regular unemployment programs and in a new program that made contractors and gig workers eligible for jobless aid for the first time. In many states, contractors and gig workers must apply for aid under both the regular program and the new program to determine their eligibility.

Applications fell broadly last week across the country, not just in California, declining in 39 states while rising in 11. They dropped nearly 12,000 in Florida, 10,000 in New York and 5,800 in Washington state.

Thursday’s report also said the number of people who are continuing to receive unemployment benefits tumbled by 1 million to 8.4 million. The decline shows that some of the unemployed are being recalled to their old jobs or are finding new ones. But it also indicates that many jobless Americans have used up their state unemployment aid — which typically expires after six months — and have transitioned to a federal extended benefits program that lasts an additional three months.

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