Main Street Malaise Ongoing As Jobless Claims Jump

For the second consecutive week, jobless claims in the US were higher than expected.

861,000 Americans filed for unemployment benefits last week. That’s the most since the disconcerting spike at the beginning of January.

Consensus was looking for 773,000. The range was 720,000 to 790,000, so the actual headline print was considerably worse than the most pessimistic guess.

A sharp upward revision to the previous week’s figure (from 793,000 to 848,000) was insult to injury. The four-week moving average is 833,250.

If blockbuster retail sales data (out Wednesday) had the potential to decrease the sense of urgency around stimulus, I suppose jobless claims once again “save” the day when it comes to reminding lawmakers that Main Street is still suffering.

You can send folks a check. And they’ll spend it. In some cases because they don’t need it (free money). But in many cases precisely because they do (no jobs).

You can look at elevated savings the same way. Do they represent people “not needing” additional stimulus money? Or do they represent people being terrified of an uncertain future? Probably both. It depends on who the people are. You can glean something about that by looking at granular data on account balances by income, as JPMorgan’s think tank did during the fourth quarter of last year (here).

Continuing claims for the week ended February 6 were 4.494 million. That too was worse than consensus. The previous week was revised higher. It’s just a sideways grind (figure below).

Pandemic unemployment assistance claims for the week of February 13 rose. Ongoing PUA and Pandemic Emergency Unemployment Compensation claims stood at 7,685,389 and 4,061,305, respectively, as of January 30.

The message is clear: The US labor market is still mired in the recessionary doldrums. Week after painful week, it’s the same story.

Perhaps, once vaccine rollout is complete and herd immunity achieved, things will limp back to “normal.” But one gets the distinct impression that if what matters is jobs (and particularly services sector jobs), the momentum is lost for the foreseeable future.

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