709,000 Americans filed for unemployment benefits last week, in what’s either a “new pandemic low” or an “elevated print still in excess of the pre-pandemic record,” depending on whether your internal narrative generator is set to optimism or pessimism.
The headline number is significantly better than expectations. The market was looking for 731,000. The previous week was revised higher to 757,000.
This is incrementally positive news, especially considering the extent to which the last two weeks were the very definition of stagnation. It’s conceivable that claims could drop below the pre-pandemic high-water mark at some point in the next few weeks.
The four-week moving average fell 33,250 to 755,250.
Continuing claims for the week ended October 31 were 6,786,000. That’s a beat, if only at the margins. Consensus was looking for 6.83 million. The previous week was revised lower.
With ongoing claims, the story seems to be the same every week, with the obligatory caveat that there’s always room for ambiguity and misinterpretation considering the interplay between various programs.
Looking quickly at the “all programs” table shows PEUC claims rising another 159,776, ostensibly suggesting folks continue to exhaust regular state benefits and move to emergency programs.
I think markets have become somewhat fatalistic about the labor market situation and fiscal stimulus. Every incremental improvement in the headline numbers is just more “evidence” for lawmakers who aren’t predisposed to “going big,” so to speak. The longer you wait around, the data will “improve,” which means it’s theoretically possible to simply sit on your hands if you’re an elected representative and wait for this to work itself out.
Of course, the problem is that these numbers represent real people, and try as we may, it’s not possible to get a perfect read on the situation. Long-term unemployment surged in October on at least a couple of metrics, and despite years of study, I’m still not sure how the government classifies someone who, for example, totally gives up and disappears into the underground economy selling — I don’t know — knockoff Gucci hats and bootleg DVDs while working part time as a bartender for tips that don’t ever show up on a tax return.
And now, the services sector will be forced to grapple with prospective new restrictions on operating hours in some locales as the US struggles with surging infections and hospitalizations.
“The obvious concern is the fallout from a fresh round of lockdowns on the labor market in the absence of new fiscal stimulus,” BMO’s Ian Lyngen and Ben Jeffery wrote Thursday. “The evolution of the political landscape in DC [has] undoubtedly slowed progress toward fiscal bailout 2.0 and, if anything, skewed the ultimate size of the deal toward the lower end of estimates,” they added, before adopting a somewhat upbeat tone in noting that “the process is still underway and nonetheless likely to yield some type of result in the first quarter,” while an unemployment rate of 6.9% makes it possible to suggest that “the broader outlook is somewhat insulated from a new round of layoffs in the front-line service sector.”
Again, you can write your own script. Choose your own adventure.
Script would be to look at the labor participation rate for 30-54 year olds. This cohort is less likely to dive back into graduate school or retire early. My guess is that is a more telling statistic than claims or the u-3 or u-6 unemployment rate.