Initial unemployment insurance (UI) claims fell last week after surging the week prior to their highest levels since July. The surge was likely due to a combination of larger-than-expected seasonal and pandemic-induced layoffs which are now slackening. Even as seasonal layoffs wane, claims are still elevated at levels not seen in months.
Seasonally adjusted claims are also likely understating the economic and human impact. Even if a layoff is expected due to seasonal trends, the pandemic means that workers laid off now are facing even more hardship than usual with savings depleted and jobs scarce.
The public health situation also means things are going to get worse before they get better. The current wave of the pandemic doesn’t appear to be receding yet and the prospect of new, more transmissible variants raise the risk of a prolonged third wave. While the vaccine offers a light at the end of the tunnel, we’re still far away from a complete reopening of the economy that could drive rehiring and stem further layoffs.
Today’s report comes as President Joe Biden takes office and sets the stage for the economic challenges that the Biden administration will face. On top of tackling the pandemic, an early hurdle facing the new administration will be the expiration of expanded UI programs in March. A major determinant for the economy’s trajectory in 2021 will be how the new administration navigates passing aid with only the slimmest of margins in the Senate.
Today’s UI Claims Report
Initial UI claims fell to 960,668 from 1,111,971, on a non-seasonally adjusted basis, according to the latest figures from the Department of Labor for the week ending January 16. On a seasonally adjusted basis, claims fell to 900,000 from 926,000. Seasonally adjusted claims are still higher than two weeks ago, indicating that the surge in claims at the beginning of the year has exceeded even the usual seasonal spike.
Pandemic Unemployment Assistance (PUA) claims jumped to 423,734. PUA claims rebounded sharply from a disruption to the program caused by the December relief bill’s delayed extension. Despite the lull, UI and PUA claims combined are now elevated at 1.38 million, nearing the high levels from December.
Non-seasonally adjusted continuing claims for UI dropped to 5.6 million for the week ending January 9. On a seasonally-adjusted basis, continuing claims fell to 5.1 million. Improvements in continuing claims have slowed over the last few months as rising COVID-19 cases stalled the economic recovery.