385,000 Americans filed for unemployment benefits last week, a reprieve of sorts after two consecutive weeks of initial claims prints above 400,000.
Economists were looking for 383,000 on the headline, so Thursday’s print was essentially in line.
The range was 350,000 to 400,000. The previous week was revised slightly lower. The four-week moving average dropped to 394,000 (figure below).
The latest “real time” update on the labor market came in the wake of a disappointing read on private payrolls and ahead of July NFP. ADP was a woeful miss for July, and the breakdown showed the leisure and hospitality sector created the fewest jobs since February.
A fleeting spike in initial claims last month raised the usual questions about the impact of enhanced unemployment benefits and artificial labor shortages purportedly exacerbated by generous government assistance.
The trajectory is now moving back in the right direction (figure below), but momentum clearly stalled in June.
Continuing claims for the week ended July 24 were 2.93 million. Ongoing Pandemic Unemployment Assistance and PEUC claims were 5,156,982 and 4,246,207, respectively, for the week of July 17.
Ultimately, some 12.5 million Americans are still receiving some sort of benefits. By now, you know the story. Or at least you should: This is a waiting game. Until pandemic-era programs roll off in their entirety, it’s mostly impossible to get a “clean” read on the labor market.
But even once enhanced benefits end, it’ll likely be months before a definitive assessment is possible. I’ve long suggested that eliminating the frictions which produced the widest disparity between vacancies and hires in history won’t be as easy as ending the emergency programs and watching jobseekers line up around the block.
The figure (above) shows how the current dynamic has manifested in food services.
“Fixing” that isn’t likely to be as straightforward as critics of government assistance would have you believe.
That’s not a partisan assessment, by the way. The sheer number of factors you’re compelled to consider when evaluating the situation is daunting.
For example, scarcely anyone mentions the possibility that America’s former servers and bartenders may be concerned not with their own health (i.e., not with being around unvaccinated patrons), but with the outlook for the industry itself. If you’re unsure about the timeline for a return to pre-COVID consumer psychology, you might fairly question whether it makes sense to get back behind the bar.
All AMC jokes aside, I wouldn’t want to own any movie theaters in the post-COVID era. By the same logic, I wouldn’t want to bet the house (figuratively and certainly not literally) on bars and restaurants being as crowded as they used to be, any initial cabin-fever inspired binge eating and drinking notwithstanding.
With reservoir species now shown to include deer, it is virtually assured that covid will be with us for a very long time.
I suppose the bigger question for me is, how far does the Delta (and beyond) variant have to spread before companies that are demanding their workers who have been highly effective for over a year but desperately need to return to office change their tune? And how long of basically fully remote work will it take for these businesses to recognize the landscape has shifted and they need to re-asses how their employees work and where?
I agree with your sentiments about returning to bars and restaurants after Covid. Consumer behaviour has changed and it will take roughly 2 years to change back completely. Here in Finland, alcohol consumption has remained relatively unchanged. Only the location has changed, with allied changes in consumption cost