Nearly 1 million Americans filed for unemployment benefits last week, a rather disconcerting development that both underscores the precarious state of the labor market and increases the urgency of additional fiscal aid.
The headline print for initial jobless claims was 965,000, far worse than the 788,500 consensus expected, and miles above a revised 784,000 from the previous week.
Coming as it does on the heels of a disappointing December jobs report, this news should serve as a wakeup call to anyone who may have inexplicably been on the fence about whether the world’s largest economy could use another dose of demand-side stimulus.
We are now 300,000 above the pre-pandemic record set in 1982. The four-week moving average rose to 834,250.
The range of estimates from nearly four-dozen economists was 747,000 to 875,000, so this was considerably worse than even the most pessimistic guess. It also marks the largest WoW rise since March.
Continuing claims missed too. At 5.27 million, ongoing claims were up 200,000 in the week ended January 2. The market was looking for 5 million.
Initial pandemic unemployment assistance claims jumped 123,311. Continuing PUA and PEUC claims in the week through December 26 dropped to 7.44 million and 4.17 million, respectively.
On the face of it, the initial claims print is very (very) bad. Outside of the pandemic context, it would be unthinkable. And, again, even in the context of the last six months, this print sticks out.
It’s possible the market will see this through a “bad news is good news” lens given that it only adds to the case for more stimulus on a day when Joe Biden was set to unveil a $2 trillion economic relief plan.
One thing’s for sure: The “V-shaped” recovery in the labor market didn’t pan out. People are jobless and starving by the millions.