US weekly jobless claims unexpectedly jump to 362,000 as government creeps toward default

• Filings for unemployment benefits jumped to 362,000 last week, signaling the hiring recovery slowed again.
• Economists expected claims to drop to 335,000. The print marks a third straight increase.
• Continuing claims fell slightly to 2.8 million for the week that ended September 18.

Filings for unemployment insurance jumped again last week, signaling continued weakness in the labor market's rebound.

Jobless claims totaled a seasonally adjusted 362,000 last week, the Labor Department said Thursday morning. Economists surveyed by Bloomberg expected claims to drop to 335,000.

The print places claims further above pandemic-era lows and marks a third straight increase. The prior week's count of 351,000 claims went unrevised.

Continuing claims, which track Americans actively receiving unemployment benefits, fell slightly to 2.80 million for the week that ended September 18. That fell short of the median estimate for 2.79 continuing claims. The previous reading was revised lower to 2.82 million.

Weekly claims have steadily increased in the weeks after the federal government cut its boost to UI payments. The government had been supplementing states' benefits with a $300 weekly boost since March. That expansion ended on September 6, leaving UI beneficiaries with diminished support amid the Delta wave.

The Thursday data comes during a critical week for Congress and the broad economic recovery. Lawmakers are staring down key deadlines to keep the government funded and avoid an unprecedented default on government debt, and brinkmanship between Democrats and Republicans has delayed simple fixes.

The latest congressional activity suggests lawmakers will avoid a shutdown. Senate Majority Leader Chuck Schumer said Wednesday that lawmakers reached a deal to fund the government through December 3. The Senate is set to vote on the measure Thursday morning, allowing the House to pass the bill before funding expires October 1.

Progress toward avoiding default has been less encouraging. Congress has just 18 days to raise the debt ceiling, which limits how much the government can borrow to pay its bills. Republicans are adamantthey won't support any legislation to raise the limit, leaving Democrats with few options.

Failure to lift the ceiling would force the government to default on its debt and almost surely plunge the country into recession. Moody's Analytics estimates the unemployment rate would nearly double to 9% and that nearly 6 million jobs would be erased. Funding for state and local government aid would also freeze. UI programs could swiftly be cut just as millions of Americans lose their jobs.

Time is of the essence, then, should lawmakers hope to keep the recovery on track.