Thursday, January 14, 2021

Unemployment jumping in January, driving Biden to go big on stimulus

We knew the jobs market deterioriated at the end of 2020 as the COVID pandemic worsened, capped off by a drop of 140,000 jobs in Friday's jobs report for December.

But it looks like it's getting worse in January, particularly after today's report on weekly unemployment claims.
First-time claims for unemployment insurance jumped to 965,000 last week amid signs of a slowdown in hiring due to pandemic restrictions, the Labor Department reported Thursday.

The total was worse than Wall Street estimates of 800,000 and above the previous week’s total of 784,000....

.....The total was the highest since the week of Aug. 22, when just over 1 million claims were filed.

Continuing claims also were higher, rising 199,000 to 5.27 million. That figure runs a week behind the weekly claims total and increased for the first time since late November.
The one-week jump is startling, but it underscores that new unemployment claims stopped declining in early November, and have been mostly on the rise over the last 5 weeks.
The continuing claims data lags by a week, and continuing numbers from the PUA program and long-term unemployment programs are two weeks behind, which means that you can only go through the last week of December if you want to look at all of the programs together. And up until the last week of 2020, total claims across those programs were declining.
But that December 26 date is important, because that was original ending date of both the PUA program and the PEUC program that let the Feds pay for unemployment benefits between 27-39 weeks. These programs were extended by the COVID/stimulus deal that passed Congress right before Christmas, but President Trump delayed signing that bill until Dec. 27, which meant that there was confusion over whether these programs would be renewed.

This seems to have led many to not file their claims in these programs at the end of December, and pushed some to go onto the Extended Benefits program that pays for benefits after the expiration of PEUC benefits. The total amount of Amercians that received unemployment benefits beyond the 26 week mark went up by 50,000 in the last week of 2020. But the number of people on PEUC (in gray) went down by 325,000, and the number of people on Extended Benefits (in yellow) went up by 375,000.
Now PEUC is back in place, allowing recipients to get benefits for an additional 11 weeks under the new stimulus bill, along with a $300-a-week boost for all benefits. That means we should expect a jump in PEUC, PUA and continuing claims in the upcoming reports, as people re-enroll in those programs, and more newly unemployed people join them.

This slowdown in the jobs market is undoubtably a big reason behind President-elect Biden's announcement of a $1.9 trillion stimulus package which includes a $400-a-week supplement to unemployment benefits. He knows that the already-large jobs hole is getting larger, and it will take significant help to reverse the declining trends that is threatening to cause a double-dip recession in early 2021. Yes, controlling COVID and getting people vaccinated will go a long way toward stopping that slide as well. But demand has to be kept up in the months that it'll take for most Americans to be able to get their shots, and plugging those gaps now means that it won't take as long for things to get back towards normal after enough people get the vaccine.

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