All told, 17.8 million people were receiving unemployment benefits in the week that ended Jan. 16, the latest period for which data are available. That’s down from 18.3 million from the week before.
Despite the generally dim picture of the economy, some hopeful signs have emerged this week. Auto sales rose solidly in January, and a gauge of business growth in the service sector picked up. So did spending on home construction.
That doesn’t mean a rebound is near in the job market, which typically lags behind recoveries in the broader economy. Employers have been hesitant to hire when consumer spending has faltered.
The government’s jobs report for January, to be released Friday, is expected to show a modest hiring gain of perhaps 100,000, according to data provider FactSet. The unemployment rate is forecast to remain stuck at a high 6.7% for a third straight month.
An increase in hiring would represent a welcome improvement over December, when employers cut jobs for the first time since April. Yet with the economy still down nearly 10 million jobs from its level before March, a gain of that modest size would provide little benefit for most of the unemployed.
Once vaccinations become more widely distributed and administered in the coming months, economists expect growth to accelerate at a sustained clip, particularly if Congress provides significantly more aid to households, small businesses and states and cities. Some analysts predict that under those circumstances, economic growth could surpass 6% for 2021.
Consumer spending picked up in January, according to debit and credit card spending tracked by Bank of America, after $600 checks were distributed to most adults under last year’s $900 billion aid package. Michelle Meyer, U.S. economist at Bank of America, estimates that those checks are being spent faster than the similar-but-larger $1,200 payments that were distributed last spring.
Still, Americans are saving the bulk of the payments, Meyer said in a research note. That growing pool of savings could help fuel increased consumer spending once the pandemic is brought under control.