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US jobless claims rose by 16K to 351K last week

 The number of Americans filing new claims for jobless benefits unexpectedly rose last week after hitting a pandemic low a week earlier, but economists says the labor market will continue to steadily recover.  

Last week 351,000 people filed for unemployment benefits, a 16,000-person spike from the week before when 335,000 filed, according to data from the Department of Labor (DOL). 

The first week of September saw only 310,000 jobless claims - a new low amid the pandemic. At the height of the pandemic last year, about 6.1 million new claims were being filed weekly. 

There was a 24,221 jump in unadjusted claims in California that offset a sharp decrease in filings in Louisiana, which was devastated by Hurricane Ida in late August. 

The number of Americans seeking unemployment benefits spiked again last week as concerns rise over the surge in Covid-19 infections due to the hyper-contagious Delta variant and its affect on the economy

Inflation and labor shortages have held back further economic progress in recent weeks. The country offered only 235,000 new jobs last month after having added roughly a million in both June and July

Inflation and labor shortages have held back further economic progress in recent weeks. The country offered only 235,000 new jobs last month after having added roughly a million in both June and July

The four-week moving average of claims - considered a better measure of labor market trends - fell 750 to 335,750 last week. 


But despite the steep rise new claims over the past two weeks, the number of Americans seeking unemployment benefits appears to be falling at a steady pace since peaking at 900,000 in early January.

But the spread of the Delta variant this summer has put renewed pressure on the economy and the job market. 

More than 2.8million Americans have remained on traditional state unemployment benefits since 2020 - a number twice as high as pre-pandemic levels yet significantly lower than this time last year.

In September of last year about 13million Americans were on traditional state unemployment benefits. 


While economic recovery is underway inflation and labor shortages have held back further progress in recent weeks and officials have warned that recovery will take a long time.

The country offered only 235,000 new jobs last month after having added roughly a million in both June and July, thus falling way short of expectations and triggering concerns that economic recovery is flatlining.

Hiring plummeted in industries that require face-to-face contact with the public -  notably restaurants, hotels and retail.

Restaurants and bars cut 42,000 jobs in August after the hospitality and food services industry as a whole added 115,000 jobs in July, according to a report from the Labor Department's Job Openings and Labor Turnover Survey.

Biden insists plan is working as economy only adds 235,000 jobs
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On Tuesday the US reported more than 120,000 new Covid-19 cases and about 1,020 new deaths, according to the Center for Disease Control and Prevention, which is a decline in the 180,000 new infections being reported last month

On Tuesday the US reported more than 120,000 new Covid-19 cases and about 1,020 new deaths, according to the Center for Disease Control and Prevention, which is a decline in the 180,000 new infections being reported last month

Hotels added just 7,000, the fewest since February.  

But President Joe Biden shared an optimistic view of the numbers during a news conference last Friday.

'What we're seeing is an economic recovery that is durable and strong. The Biden plan is working, we're getting results,' he said at the White House Friday morning.

But he admitted the Delta variant was why the Friday report 'wasn't stronger'.

On Wednesday the Federal Reserve reported that US economic activity 'downshifted' in July and August, in part because of a pullback in dining out, travel and tourism related to concerns about the Delta variant. 

The day before the US reported more than 120,000 new Covid-19 cases and about 1,020 new deaths, according to the Center for Disease Control and Prevention, which is a decline in the 180,000 new infections being reported last month. 

Also on Tuesday Moody's Analytics released a report warning that the US Treasury Department will run out of cash by October unless Congress raises its debt ceiling. 

Currently, the Republicans are refusing to increase the debt limit over concerns about Biden's vast spending plans.

Mark Zendi, the chief economist at Moody's Analytics, said in his latest report that the Biden administration and Congress are 'playing a dangerous game with debt limit'.  


He cited the pressing September 30 deadline - by which Congress must decide whether 'to renew expiring government spending authority for the 2022 fiscal year that begins October 1'.

The blow would come in the form of a depression that would rival the Great Recession, according to CNN Business.

Moody's predicted a default on debt payments would wipe out nearly six million jobs and raise the nation's unemployment rate from 5.4 to nine per cent.

Stock prices would also be slashed by one-third, erasing about $15trillion in household wealth as a result, as reported by CNN.    

Despite the threat of such a large economic downturn Republicans have refused to raise the debt ceiling because of the Biden administration's trillion dollars worth of spending plans.

In August Democrats unveiled a $3.5trillion budget of funding hikes for economic and environmental programs. The 92-page measure laid the groundwork for legislation that - over a decade - would pour mountains of cash into their key priorities.

That included money for education, health care and environmental programs, plus tax breaks for families - funded in large part by tax increases on the wealthy and on corporations  

The Senate later passed a bipartisan version of the infrastructure bill last month with a price tag of $1.2trillion, which Democrats in the House said they wouldn't approve without approval of the $3.5trillion reconciliation package first.

Manchin, the most moderate Democrat in the Senate, said that he could not support the reconciliation as it stands.

If he does not budge, the Congress could be at a deadlock where neither of the massive pieces of legislation will get through - something Moody's noted was part of the problem.

Moody's found that the worst case scenario would be if Congress didn't act to lift the debt ceiling and the stalemate carried on.

Mark Zendi (pictured), the chief economist at Moody's Analytics, said in his latest report that the Biden administration and Congress are 'playing a dangerous game with debt limit'. The US defaulting on its debt payments could be a 'catastrophic blow' to Covid-19 economic recovery and result in the loss of six million jobs, according Moody's latest analytics

Mark Zendi (pictured), the chief economist at Moody's Analytics, said in his latest report that the Biden administration and Congress are 'playing a dangerous game with debt limit'. The US defaulting on its debt payments could be a 'catastrophic blow' to Covid-19 economic recovery and result in the loss of six million jobs, according Moody's latest analytics

The US Treasury Department said it will run out of cash in October unless Congress raises its debt ceiling. The chart shows how the department predicts it will run out of money from now until October 20, when it owed more than $20billion to Social Security recipients

The US Treasury Department said it will run out of cash in October unless Congress raises its debt ceiling. The chart shows how the department predicts it will run out of money from now until October 20, when it owed more than $20billion to Social Security recipients

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