Initial claims for unemployment insurance rose slightly in the week ending August 15, to 1.106 million after seasonal adjustment. Claims for the prior week were revised up slightly to 971,000, from 963,000. This is only the third time in the past 20 weeks that initial claims have increased. After peaking at almost 7 million per week in last March, initial claims have declined 84 percent. However, they are still running far above their pre-pandemic level of around 200,000 per week. The increase in claims was not due to the seasonal adjustment process; non-seasonally adjusted initial claims rose 6 percent in the week ending August 15.
Continuing claims for the regular UI program, the number of people receiving benefits, fell to 14.844 million in the week ending August 8. Claims for the prior week were revised slightly lower, to 15.480 million from 15.486 million. Non-seasonally adjusted continuing claims saw a similar decline of 6 percent In the week ending August 8.
After starting the year at around 1.7 million per week, continuing claims peaked at almost 25 million in early May. They have since fallen steadily, and are now down around 40 percent.
The number of people receiving any form of unemployment insurance, including Pandemic Unemployment Assistance implemented in response to the crisis, was 28.051 million in the week ending August 1. This was down 198,000 from the previous week. One year ago there were 1.704 million total recipients. These claims are not seasonally adjusted, given that the PUA has only been in place for the last few months. The number of people receiving any form of UI was 16 times higher in late July of 2020 compared to the same time last year.
After a large, encouraging decline in early August, initial claims for unemployment insurance rose in the week ending August 15. Claims exploded in March as the coronavirus pandemic hit and states started to restrict economic activity, and then steadily declined from May through mid-July as layoffs abated. Since then initial claims have been more uneven, sometimes falling, sometimes rising, but the general trend is slightly down. This indicates that layoffs are slowing, but that involuntary unemployment remains extremely elevated.
Continuing claims show a similar picture. The amount of unemployment in the U.S. economy is gradually falling, but is still very high, and the pace of improvement is slowing. It could be that the increase in cases of coronavirus in many parts of the country over the summer has weighed on the recovery in the labor market.
It is too soon to tell if the expiration of bonus unemployment insurance payments of $600 per week at the end of July has had any impact on the labor market. The loss of benefits, reducing household income by about $700 billion a month, could become a drag on the recovery as some consumers are forced to cut back on their spending. An inability of Congress and the Trump administration to agree on additional stimulus measures is a downside risk to PNC’s forecast of a solid economic recovery through the rest of 2020 and throughout 2021.
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