Jobless Claims Miss Again As Labor Market Outlook Still Murky

Over the past month, a hodgepodge of key economic data beat expectations, helping to fuel the “V-shaped” recovery narrative.

The May jobs report, retail sales, and PMIs all emboldened those who are keen to embrace the reopening story, and mobility data showing life in America gradually returning to some semblance of “normal” helped make the case.

Through it all, jobless claims refused to play along. Yes, the trend is obviously lower from the unfathomable levels witnessed during the most acute weeks of the lockdowns, but the weekly numbers remain elevated and continuing claims have proven to be frustratingly stubborn.

On Thursday, the latest numbers show another 1,480,000 million Americans filed for unemployment benefits last week, down just 60,000 from the previous week’s total, which was revised up to 1,540,000.

The headline print is considerably worse than estimates. Economists were looking for 1.32 million. 1.48 million very nearly matched the most pessimistic guess.

The four-week moving average (orange line in the figure) dropped to 1.62 million.

Continuing claims fell 767,000 to 19.522 million in the week ending June 13. That looks to be below estimates. Consensus was looking for 20 million. It’s possible that will be seen as incrementally positive news.

Still, the bottom line is that weekly claims have all but stopped falling. I suppose that’s to be expected, and I wouldn’t want to give the impression that anyone with any sense thought the normalization process would be quick.

The point, rather, is just to say that these numbers aren’t generally consistent with the idea that the labor market is healing rapidly.

This makes two weeks in a row of worse-than-expected claims figures, and you’re reminded that Congress is not expected to come to any kind of consensus on whether to extend the extra federal unemployment assistance offered on top of state benefits until after the July recess.

Additionally, it is still far from clear how much of the improvement in the labor market is due to the Paycheck Protection Program (PPP).

It goes without saying that if demand is structurally impaired or takes another hit from, for example, renewed lockdowns in states where virus cases are rising, or from “self-imposed” stay-at-home protocols as citizens worry about the headlines that are plastered all over the evening news, the jobs that were added back and/or retained thanks to the PPP could eventually be lost.

Congress would do well to consider passing another relief package sooner rather than later. Republicans will not want to be seen, in hindsight, as an impediment to another stimulus deal if, come November, the monthly jobs reports aren’t “great again”.


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5 thoughts on “Jobless Claims Miss Again As Labor Market Outlook Still Murky

  1. Singapore has imposed a “2 mask” system for its residents. A surgical quality mask if you leave your home and a “heavy duty” mask if you are entering crowded places.
    It is so obvious what the US needs, but refuses to do.

    It is great that Bill Gates is spending money to build vaccine factories. but how about we focus on 100% mask wearing compliance and reduce the contagion factor to below 1 and toward zero. This is what will kick start our economy faster than even a semi-successful vaccine. Granted, less money to be made in masks than vaccines…
    The definition of insanity is doing the same thing over and over again and expecting different results.

    1. Without Federal leadership mandating mask wearing it’s creating the convoluted system we have now where some states have mask policies and others do not. Even those that do have policies, people may not adhere to the policy because of a perceived slight to their freedoms and because the president refuses to wear one for cameras (if at all).

      The lack of leadership at all levels of the federal government during this pandemic has created the situation we are in where we have pockets of the pandemic spreading quickly in multiple places. That spread will not stop this year either because at this point it’s become way too big to control through anything other than another lock down which has already been dispelled as an option.

    2. This is probably not technological enough for a country like ours. Developing countries do this. We should have a much better, more technological, and more expensive solution (sorry, as an immigrant this is sarcastic view of the US default thinking pattern).

  2. I continue to wonder what the earnings are of those filing initial unemployment claims this week compared to those filing initial unemployment claims a few weeks ago.
    Macys just announced they are letting go 3,900 management and corporate jobs- these types of jobs are most likely not minimum wage and will have a much greater negative effect on the economy than a person who is out of work that used to make minimum wages.

  3. What is the explanation for the huge discrepancy between first unemployment claims and unemployment levels. I am very confused by the fact that 47.5 million people have filed first unemployment claims since the third week of March, while “only” 20 millions are on the unemployment rolls. I know the two result from different surveys – but in the end, shouln’t the numbers be somewhat closer than that. It is pretty difficult to get a real picture of unemployment in America if you can’t reconcile these figures somehow. Any feedback would be much appreciated!

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