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Number of Americans filing for unemployment benefits dips

Unemployment numbers and GameStop stock
New unemployment numbers and the uproar over GameStop stock 18:32

The number of Americans filing for jobless aid has fallen for two weeks in a row, even as the broader economy continues to struggle.

Some 847,000 people applied for unemployment benefits the week ending January 23, the Labor Department said Thursday. That's a drop of 67,000 from the prior week's figure. Another 426,000 applied for Pandemic Unemployment Assistance, a program for gig workers and people who are self-employed. 

In the two years before the pandemic, weekly unemployment applications typically numbered between 200,000 and 250,000.

"Even with little substantial movement [downward] over the last two weeks, magnitude remains a problem," AnnElizabeth Konkel, economist at the Indeed Hiring Lab, said in a note.

Roughly 18 million people were receiving some sort of federal or state unemployment assistance as of January 9, a sign the job market has yet to recover from the damage inflicted by the public health crisis. Economists expect layoffs to remain high until coronavirus vaccines become broadly distributed. At that point, the theory goes, Americans will unleash pent-up demand for travel, dining out and public entertainment, spending money that should boost hiring.

"Additional fiscal stimulus and broader vaccine diffusion should support an improved labor market in the spring, but claims are expected to remain high in the near term as the pandemic continues to restrict activity, with new strains of the virus a concern," analysts at Oxford Economics wrote in a note.

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But the economy remains in a deep hole. A separate government report released Thursday showed that the U.S. economy last year shrank by the largest amount since the end of World War II. Gross domestic product, the total of all goods and services produced in the U.S., contracted by 3.5% in 2020, the Commerce Department said. Consumer spending slowed sharply last year, to a 2.5% annual increase.

The Federal Reserve took note of the economic threats after its latest policy meeting ended Wednesday. The Fed kept its benchmark interest rate at a record low near zero and stressed that it would keep pursuing its low-rate policies until a recovery is well underway.

"We are a long way from a full recovery," Fed Chairman Jerome Powell said, noting that the economy has faltered in recent months, especially in face-to-face industries such as restaurants, bars and hotels.

The impact on the job-rich travel sector has been especially devastating: The global tourism industry lost $1.3 trillion in revenue in 2020 due to pandemic shutdowns here and overseas, the U.N. World Tourism Organization said Thursday, calling it the "worst year" in tourism history. 

The Associated Press and CBS News' Pamela Falk contributed reporting.

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