Initial unemployment insurance (UI) claims rose last week in a surprise jump, signaling a weakening recovery as COVID-19 cases flare up around the country. UI and PUA claims combined jumped to 1.14 million even after an unusual spike in claims from Louisiana reversed, and claims remain stubbornly above the 1 million mark for the 36th week in a row.
Today’s report includes continuing claims data for the reference week for the November jobs report. Continuing claims declined by 2.2 million between the October and November reference weeks, a sharp slowdown from the 4.9 million drop from September to October. However, the drop still overstates economic gains as it includes millions of Americans who have exhausted their UI benefits.
Twelve million Americans face a looming benefits cliff at the end of the year when the PUA and PEUC programs expire. Congressional inaction risks pulling the rug out from under Americans right as the pandemic worsens.
Additionally, we’re entering a stretch of murky waters for the recovery. As the winter begins, the seasonal adjustment expects a large surge in claims due to normal seasonal trends, but if those layoffs were pulled forward earlier into the year because of the crisis, the seasonal adjustment may understate pandemic-induced layoffs. Not only do the benefits cliff and surging pandemic present real threats for the economy, UI claims may become an even less reliable real-time indicator over the coming weeks.
Today’s UI Claims Report
Initial UI claims rose to 827,710 from 749,338, on a non-seasonally adjusted basis, according to the latest figures from the Department of Labor for the week ending November 21. On a seasonally-adjusted basis, claims rose to 778,000 from 748,000, extending last week’s jump in a surprise increase exceeding even the normal seasonal surge before Thanksgiving.
Pandemic Unemployment Assistance (PUA) claims dipped to 311,675. UI and PUA claims combined jumped to 1.14 million, extending the surge last week. UI and PUA claims combined are over 1 million new weekly claims for the 36th week in a row. While claims have fallen over the last few months, they are now putting distance between themselves and the 1 million threshold that claims had danced around the last few weeks.
Non-seasonally adjusted continuing claims for UI fell to 5.9 million for the week ending November 14. Despite a rapid decline in mid-September, the drop in continuing claims has slowed in recent weeks. The decline is still being driven, in large part, by the exhaustion of UI benefits for millions of unemployed Americans.