861,000 filed as COVID-19 cases drop

America may be recovering from its deadly coronavirus surge, but the labor market still has a nasty cough.

The number of workers seeking unemployment benefits unexpectedly rose to 861,000 last week even as COVID-19 infections declined sharply across the country, the feds said Thursday.

The latest batch of initial jobless claims brought the total for the coronavirus pandemic to about 78.9 million — a figure more than twice the size of Afghanistan’s population. That includes the prior week’s 848,000 filings, which the US Department of Labor revised upward from the 793,000 it initially reported.

The data suggests employers and workers are struggling to bounce back after many states imposed lockdown measures to control the record-setting spike in COVID-19 cases that peaked in early January.

“There’s no getting around the ugly look of new jobless claims in the latest reading,” said Mark Hamrick, senior economic analyst at Bankrate.

Jobless filings have remained above the pre-pandemic record of 695,000 for 48 weeks straight. Economists were expecting the historically high number to fall to 775,000 last week, according to Wrightson ICAP, which would have marked the lowest level since the last full week of December.

To unemployment insurance expert Andrew Stettner, the jobless claims data underscore the need for Congress to act on President Biden’s $1.9 trillion stimulus proposal, which would extend key aid programs such as a $300 weekly boost to unemployment benefits that are set to expire in March.

“It will take months, through the summer and beyond, for enough re-hiring to occur to absorb all the workers still on unemployment benefits and the steady stream of new applicants,” said Stettner, a senior fellow at the Century Foundation think tank. “Robust pandemic aid is precisely the medicine the economy needs to get Americans back where they want to be: at work.”

While jobless claims spiked last month as the coronavirus spread rapidly, new COVID-19 cases are now declining in 46 states, and the seven-day average of deaths has dropped about 46 percent from its mid-January high of 4,022, according to the COVID Tracking Project.

The decreases have allowed some states to ease lockdown measures they imposed to curb the deadly surge, which has stoked optimism among economists about hiring accelerating in February as more businesses reopen. Indoor dining resumed in New York City last week, and hard-hit California has started easing restrictions under a tiered reopening scheme.

“We may be eventually on the verge of a kind of shoulder, or transition, season for the economy in the coming months as the pandemic eases, more vaccines are administered, and consumers increase spending followed by a pick-up in hiring,” Hamrick said.