Seasonal distortions caused a larger-than-expected decline in first-time jobless claims to 730,000 for the week ending Feb. 20, which significantly understates the true pace of first-time firings across the economy.
First-time jobless claims declined to 730,000 for the week ending Feb. 20, a drop that can be attributed to the deep freeze across the country.
We would urge policymakers to approach the decline with a grain of salt, which is generally more than was available for the roads in Texas during its deep freeze. Even with the weather-induced distortions, claims at this level are extraordinarily elevated and merit further fiscal relief, which is working its way through Congress.
Claims in Texas alone declined by 7,433, and the state of Ohio observed an outsized decline of 46,259, both because of unusually cold weather that settled in across the country. Perhaps more interesting was the decline of 50,130 initial claims in California, according to Labor Department data released on Thursday. Overall, claims dropped from a revised 841,000 the previous week.
Whatever the case, there are always holiday and weather-induced distortions this time of the year in jobless claims data, so investors should anticipate a rise in claims over the next two weeks. We would recommend paying attention to the claims data for the week ending March 13, which should provide the first clean look at the underlying trend in the data.
Beneath the hood, continuing claims eased to 4.41 million from an upwardly revised 4.52 million during the previous week, while filings for federal Pandemic Unemployment Assistance increased by 451,402, down from 512,862 previously. We would attribute that to people exhausting their eligibility for such aid. Total claims increased to 19.04 million for the week ending Feb. 6.
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