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First-time jobless claims decline to 787,000, implying modest improvement

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The pace of first-time claims for unemployment insurance declined to an elevated 787,000 for the week ending Oct. 17, strongly suggesting that the economy is slowing in the fourth quarter.

The pace of first-time jobless claims declined to an elevated 787,000 for the week ending Oct. 17.

Continuing claims remained elevated at 8.37 million, which implies an insured unemployment rate of 5.7%, according to data released by the Labor Department on Thursday.

One gets the sense that this data, on the margin, will tend to harden positions on both sides of the aisle in Washington as talks remain stalled on another round of fiscal aid.

Through the week ending Oct. 3, there were 23.1 million people on some form of unemployment insurance. California has resumed reporting claims following a two-week pause.

The primary takeaway from Thursday’s report is that things are modestly improving, but that there is going to be deep economic scarring within the labor market. Claims at this level are producing, in real time, a turn to self-employment for many who are clearly not going to be recalled to work by those small firms that have not reopened but are not yet formally out of business or bankrupt.

According to Opportunity Insights, the number of small businesses open relative to January has declined by 24.1%, with overall revenues down 23.2% over the past nine months.

At one point, one has to assume that these firms are not coming back and that those who formally worked for them have exhausted their unemployment benefits and will either turn to self-employment or not be counted as looking for work. This dynamic, of course, results in a significant underestimation of the true level of unemployment.

For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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