Initial unemployment insurance (UI) claims rebounded last week after a larger-than-usual Thanksgiving lull, rising to the highest level in months. The surge indicates that last week’s improvement was likely a fluke, and while initial claims have see-sawed in the last two months, today’s report suggests claims are worsening rather than just stagnating. The surge in initial claims is especially concerning when claims are still above levels near the peak of the Great Recession.
The sharp fall and rebound of data around the Thanksgiving week also shows the difficulty of reading the economic tea leaves this winter. Seasonal adjustment is already difficult around the holidays, and the confluence of normal winter furloughs with a surging pandemic make it even harder to understand the root cause of weekly changes in claims.
Last week’s jobs report showed a sharp deceleration in the recovery in November, and surging UI claims only add to the picture of a rapidly slowing recovery this winter. The worsening economic data raises the specter of a double-dip recession. Despite the prospects of widespread vaccine availability by next summer, weak economic data now puts increasing pressure on Congress to extend additional relief to bridge Americans over the next few months.
Today’s UI Claims Report
Initial UI claims rose to 947,504 from 718,522, on a non-seasonally adjusted basis, according to the latest figures from the Department of Labor for the week ending December 5. On a seasonally-adjusted basis, claims rose to 853,000 from 716,000, in a rebound from the Thanksgiving week lull and the highest since October.
Pandemic Unemployment Assistance (PUA) claims climbed to 427,609. UI and PUA claims combined rose to 1.38 million, surging to their highest level since September. In addition to holding above the 1 million new weekly claims threshold for the 38th week in a row, UI and PUA claims combined have made barely any improvement at all since the beginning of October.
Non-seasonally adjusted continuing claims for UI jumped to 5.8 million for the week ending November 28, the first rise since August. On a seasonally-adjusted basis, continuing claims rose to 5.8 million. While the spike in continuing claims is concerning, the exhaustion of benefits for many unemployed will continue to put downward pressure on the continuing claims figures.