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Initial jobless claims: If you’re not confused, you’re not paying attention

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Pandemic economics has brought about an interesting conundrum: The pace of firings in the economy remains above the monthly hiring data as the unemployment rate falls. Over the past six weeks, first-time claims for unemployment insurance have averaged 867,000, which clearly points to a stalling out of improvement as claims remain at elevated levels.

The decline in the unemployment rate is likely because of the number of people exiting the labor force.

Moreover, that average stands above the 661,000 workers recalled in September. And because of the problems in reporting claims in California, the number could be much higher or lower. It is such during the time of pandemic economics.

Confused? If you’re not confused, you’re not paying attention. The decline in the unemployment rate is likely because of the number of people exhausting their unemployment insurance and exiting the labor force, which of course implies a much higher rate of unemployment (we think up to 3 percentage points) than the official data suggests.

All of this points to the need for another round of fiscal aid to provide relief to the 25 million people on unemployment insurance through the week of Sept. 19, and to the beleaguered small and medium-size firms that are likely not to survive a second wave of the pandemic.

Through the week ending Oct. 3, there were 840,000 first-time claims, down from 849,000 previously, the Labor Department reported on Thursday. Once one adds in the 464,437 on the federal Pandemic Unemployment Assistance, there were 1.304 million new claims for aid.

Continuing claims eased to 10.9 million, which implies a 7.5% unemployment rate. Since mid-March, there have been 63 million claims put forward for unemployment insurance.

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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