as Pandemic-Related Programs Come to an End
- Initial claims for unemployment insurance fell in the week ending September 4 to 310,000 and have been falling steadily in recent weeks as the labor market continues to improve.
- The number of people receiving unemployment insurance benefits fell in the week ending August 21 but remained extremely elevated at almost 12 million.
- Millions of people lost access to unemployment insurance benefits this week as pandemic-related programs expired, and many others saw their benefits reduced.
Initial claims for unemployment insurance fell to 310,000 in the week ending September 4, down 35,000 from the previous week. This was the lowest level of initial claims since March 2020, as the pandemic was coming to the U.S. Initial claims have fallen in six of the past seven weeks. Claims for the week of August 28 were revised up by 5,000 to 345,000. The four-week moving average of claims, which smooths out some of the volatility, fell by 16,750 in the week ending September 4. This was also the lowest level for the four-week moving average since March 2020. The four-week moving average has fallen for four consecutive weeks.
After stabilizing at around 400,000 per week from the late spring to early summer, initial claims for unemployment insurance have moved steadily lower in over the past month as the labor market continues to improve, and are now within spitting distance of their pre-pandemic level. Initial claims jumped from 200,000 per week in early 2020 to more than 6 million in April of last year as the pandemic came to the U.S. They then fell quickly to around 900,000 per week by early August 2020, then stabilized at between 700,000 and 900,000 between August 2020 and March 2021. This spring claims fell gradually but steadily to around 400,000 per week.
Initial claims under the Pandemic Unemployment Assistance program fell by 96,000 in the week ending September 4, down from 103,000 the previous week (not seasonally adjusted). Initial PUA claims have been bouncing around at slightly above 100,000 during the summer, even as some states have ended participation in the program. The PUA program ended on September 6.
There were a total of 11.930 million people receiving some form of unemployment insurance benefit in the week ending August 21, down from 12.186 million the previous week (not seasonally adjusted). Most of those are receiving benefits under special pandemic-related programs. Total beneficiaries have been around 12 million since mid-July. This is many times the approximately 2 million weekly continued claims in early 2020, before the pandemic. Total continued claims peaked at 33.2 million in June 2020.
There were 2.783 million people receiving UI benefits under regular state programs in the week ending August 28, down 22,000 from the previous week (revised higher by 57,000 to 2.805 million). This is the lowest level for continued claims since March 2020, before the pandemic, and down from a peak of more than 23 million in May 2020. But continued claims are well above their pre-recession level of around 1.7 million, and the pace of improvement has slowed in 2021. With most people receiving benefits via pandemic-related programs, regular state continued claims have become less important as a labor market indicator.
Initial claims for unemployment insurance have moved lower in recent weeks as the labor market continues to improve, even as the delta variant remains a concern. Job growth was a disappointing 235,000 in August, far below the average gains of more than 1 million in June and July. The unemployment rate fell to 5.2% in August from 5.4% in July and is down from a peak of 14.8% in April 2020.
Although the job market is improving, the U.S. labor market still has a long way to go before it is back to normal. Layoffs remain well above their pre-pandemic level, and many millions of people who lost their jobs during the pandemic remain unemployed. Job growth will bounce back from the disappointing August to around 600,000 per month through the rest of this year, with employment surpassing its pre-recession peak in the spring of 2022. The unemployment rate, which fell from 5.9% in June to 5.4% in July, will end this year below 5%, and next year at around 4%.
The biggest question mark is what happens to the labor market, and consumer spending, given that pandemic-related unemployment insurance programs expired on September 6. These programs made benefits available for a longer period of time than usual; increased eligibility by providing benefits to the self-employed, gig workers, and independent contractors; and increased the level of benefits. As a result millions of people have lost their benefits this week, and those still receiving benefits have experienced a decline in UI income. Many states have been ending their programs over the past few months, with little apparent impact on job-seeking behavior or consumer spending. But the national expiration could have broader effects. One thing it may do is spur more job-seeking activity, which should allow for continued strong job growth through the rest of this year and into 2022. The number of job openings jumped in July to a record high as employers continue to search for workers.
# # #
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.