If it is Thursday, it is the day economists and traders alike have a look at the initial jobless claims and continuing claims in the United States.
Yesterday both numbers improved significantly, spurring optimism that the world’s largest economy is recovering faster than anticipated. Before going into more detail, it is worth reminding that the data presented every Thursday refers to the week ended the previous Sunday.
For the first time since the coronavirus pandemic, the initial jobless claims fell to 787k from the 842k recorded one week earlier. Even more interesting, the continuing claims dropped to 8.383 million from 9.397 million. In other words, over a million Americans dropped from claims assistance in the previous week, a milestone worthy to take note of.
Still Tough Times for Many Unemployed Americans
As winter reaches the Northern hemisphere, the coronavirus spreads even faster. The European countries face an incredibly high number of new infections, and the second wave is expected to reach the United States too.
Despite the improved numbers showed by both the initial and the continuing claims, twenty-three million people still claim some sort of unemployment insurance. Moreover, initial claims are still over five times as high as they were pre-crisis.
Also, if we look at the PEUC program (i.e., claims for expanded benefits), we see that the number rose from 2.79 million to 3.3 million. This erases a large portion of the good news shown by the continuing claims headline.
More precisely, a large number of those dropping out of continuing claims have applied for expanded benefits – still a sort of unemployment welfare. If we do the quick math, we see that almost half of those leaving the continuing claims applied for expanded benefits. Hence, it is yet another proof that when interpreting headlines, one needs to dig a little data into the data to get the full picture of what is going on.
Positives still exist in yesterday’s report, however. For example, the report included California, along with revisions for estimates on the Golden States. These numbers were missing from the previous reports, and the fact that initial claims dropped despite counting California is fairly good news.
Moving forward, it is clear that the country (and the economy) needs some sort of support. It may come either in the form of fiscal stimulus or monetary expansion or both – but will the politicians first wait for the US elections to pass?