Jobless Claims Remain at 52-Year Low

January 6, 2022 – The Labor Department reported that 207,000 Americans have filed new claims for state unemployment benefits, an increase of 7,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 198,000 to 200,000. The four-week moving average was 204,500, an increase of 4,750 from the previous week’s revised average. The previous week’s average was revised up by 500 from 199,250 to 199,750.

“The underlying trend in claims is downward but the speed of the drop in October and early November could not be sustained,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The fundamentals haven’t changed; the labor market remains extremely tight, and firms won’t let staff go unless they have no other choice. It’s possible that an extended Omicron wave would change that, but the initial impact likely is to make firms even more keen to keep people, as absenteeism due to Covid rockets.”

Seasonal adjustment issues likely played a role in Thursday’s report, given that the holidays lead to significant volatility in the labor market, said Scott Brown, chief economist at Raymond James.

“You’re laying off a lot of delivery people, the retail people that were hired during the holiday season,” Mr. Brown said. “But if you do the seasonal adjustment, obviously you’re trending at an extremely low level here.”

Massive government aid and the rollout of vaccines helped revive the economy and the job market by giving Americans the confidence and savings to go on a shopping spree, often online, for goods such as lawn furniture and coffee makers. Since April last year, the United States has regained nearly 18.5 million jobs. But the economy is still 3.9 million jobs short of where it stood in February 2020, and COVID variants like omicron pose a risk to the recovery, according to the Associated Press.

During the week, extended benefits were available in the following four states: Alaska, Connecticut, New Jersey, and New Mexico. Initial claims for UI benefits filed by former Federal civilian employees totaled 723 in the week, an increase of 28 from the prior week. There were 273 initial claims filed by newly discharged veterans, a decrease of 94 from the preceding week. There were 9,422 continued weeks claimed filed by former Federal civilian employees, a decrease of 43 from the previous week. Newly discharged veterans claiming benefits totaled 4,236, a decrease of 528 from the prior week. The highest insured unemployment rates in the week were in Alaska (3.1), the Virgin Islands (2.6), New Jersey (2.3), California (2.2), Minnesota (2.2), Puerto Rico (2.0), Illinois (1.9), Massachusetts (1.9), New York (1.8), and Rhode Island (1.8). The largest increases in initial claims for the week were in New Jersey (+4,660), Pennsylvania (+3,320), Ohio (+2,615), Michigan (+2,440), and New York (+2,287), while the largest decreases were in California (-7,320), Texas (-3,955), Virginia (-2,183), Alabama (-1,293), and Wisconsin (-1,181).

Looking Ahead

The job market has bounced back from last year’s brief but intense coronavirus recession. When COVID hit, governments ordered lockdowns, consumers hunkered down at home and many businesses closed or cut back hours. Employers slashed more than 22 million jobs in March and April 2020, and the unemployment rate rocketed to 14.8 percent.

But massive government spending — and eventually the rollout of vaccines — brought the economy back. Employers have added 18.5 million jobs since April 2020, leaving the U.S. still 3.9 million jobs short of what it had before the pandemic. Economists expect that tomorrow’s monthly jobs report will show that the economy generated another 400,000 jobs in December, according to a survey by the data firm FactSet.

Economists expect the report to show 400,000 nonfarm payrolls added throughout last month and for the unemployment rate to drop slightly to 4.1 percent. Such gains would show notable improvement from November’s slow growth, but still leave the labor market far from fully healed.

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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media