FEWER Americans sought unemployment benefits last week, but the modest drop did little to dispel concerns that the U.S. job market and wider economy face an arduous recovery from the devastation inflicted by the coronavirus pandemic in 2020.

The final major economic data point for a year that saw a recession of historic magnitude erupt out of nowhere stood as a fitting reminder for both how far the recovery has progressed and how much more it has to go.

While new claims for benefits reported by the U.S. Labor Department dropped for the second week in a row to a seasonally adjusted 787,000 in the week ended Dec. 26 from 806,000 a week before, it left them at roughly the level they were three months ago and with little indication they would show material improvement any time soon.

The arrival of effective COVID-19 vaccines and additional federal pandemic aid have set the stage for a brighter 2021. But economists agree the still-raging epidemic and the fractured government response to it means more difficult months ahead before improvement takes hold.

“While prospects for the economy later in 2021 are upbeat, the economy and labor market will have to navigate some difficult terrain between now and then and we expect claims to remain elevated,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said in a note.

COVID-19’s unexpected appearance late last year and rapid spread in early 2020 brought an abrupt end to a record-long U.S. economic expansion that had fostered the strongest job market in generations. It also brought down the global economy, dashing hopes for a second straight decade of uninterrupted growth and widening prosperity.

The report also showed that as of mid-December, more than 19.5 million people were receiving some form of jobless aid, including from emergency measures extended by the latest coronavirus aid bill that was passed by U.S. Congress and signed by President Donald Trump. Those emergency programs now account for roughly two-thirds of all ongoing jobless assistance.

As of Dec. 19, the number of people continuing to draw benefits under regular state unemployment insurance programs declined to 5.22 million, the lowest since March, from 5.32 million the week before. Economists took little solace from that decline, however, seeing it more the result of people exhausting benefits rather than finding new work.(SD-Agencies)