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Initial jobless claims: Expect the number to swell in coming weeks on benefits extension

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First-time jobless claims remained elevated for the week ending March 6, arriving at 712,000, down from an upwardly revised 754,000 the week before, the Labor Department reported on Thursday.

The total number of people on some form of unemployment insurance increased to 20.1 million for the week ending Feb. 20, up from 18 million previously.

Overall continuing claims eased to 4.14 million for the week ending Feb. 27, down from 4.3 million, while those filing for federal Pandemic Unemployment Assistance increased to 478,001, up from 436,138.

We would strongly urge people to view this data in light of the coming extensions to unemployment benefits under the new American Rescue Plan Act that will be signed into law on Friday.

Investors and policymakers should anticipate an increase in jobless claims in the coming weeks as more people apply for unemployment insurance benefits. Inside the Biden administration’s $1.9 trillion American Rescue Plan Act, unemployment benefits approved under the CARES Act last spring were extended through Sept. 6.

Under the plan, $205 billion was allocated for immediate aid and $284 billion was allocated for fiscal year 2021. That includes increasing the duration of Pandemic Unemployment Assistance benefits to as long as 79 weeks, from 50 weeks, for people who do not qualify for regular benefits.

It also extended to 53 weeks, from 24 weeks, benefits under the Pandemic Emergency Unemployment Compensation program for those who have exhausted regular benefits.

The first $10,200 of unemployment benefits received would be excluded from certain taxpayers’ adjusted gross income beginning in 2020. The provision would apply to taxpayers with income that’s less than $150,000.

The bill also provided $2 billion for the Labor Department to address fraud and improve access to unemployment benefits. Those funds can be used to provide grants to states and territories to develop verification tools to accelerate claims processing.

For more information on how the coronavirus pandemic 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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