UI Claims Fall as Initial 2021 Surge Moderates

January 28, 2021

Initial unemployment insurance (UI) claims fell last week. However, claims are still historically elevated due to the combination of pandemic-induced layoffs and larger-than-usual seasonal layoffs. The pullback in seasonally adjusted UI claims suggests that the larger-than-expected seasonal surge may be over. Similarly, PUA claims were mostly unchanged as data issues from the program interruption appear to have abated.

Additionally, the pandemic is likely exacerbating normal seasonal trends. For example, restaurants and bars usually furlough or lay off some workers in the slower winter season. That’s amplified by the pandemic as indoor dining remains unsafe and the winter weather makes outdoor dining untenable for establishments that would ordinarily be able to stay open this time of year. And just as the winter weather has exacerbated layoffs as the pandemic worsened, it may also slow down the rehiring of workers if businesses remain closed.

The third wave of the pandemic is showing signs of slowing, but it’s still much too early to call the third wave of the pandemic over, especially with the prospect of new, more transmissible variants on the horizon. Getting the pandemic under control and accelerating vaccine distribution are the best economic stimulus that the new Biden Administration could provide.

Today’s UI Claims Report

Initial UI claims fell to 873,966 from 975,464, on a non-seasonally adjusted basis, according to the latest figures from the Department of Labor (DOL) for the week ending January 23. On a seasonally adjusted basis, claims fell to 847,000, down from 914,000.

Pandemic Unemployment Assistance (PUA) claims fell to 426,856. PUA claims have rebounded sharply in the last few weeks following the disruption to the program caused by the December relief bill’s delayed extension. This was the first week since the interruption that PUA claims fell. This combined with the fact that PUA claims are near December levels suggests that PUA claims may have stabilized.

Non-seasonally adjusted continuing claims for UI dropped to 5.2 million for the week ending January 16. On a seasonally-adjusted basis, continuing claims fell to 4.8 million, falling below the 5 million mark. While continuing claims have declined dramatically from their peak of 24.9 million, the decline has in large part been due to the exhaustion of benefits by many unemployed Americans.

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