U.S. labor market dynamics are clearly in an unusual place. The four-week moving average of first-time claims for unemployment insurance stands at 866,250, well above the monthly hiring pace of 661,000 posted in September and the highest since August. It will most likely be well above the top-line hiring number in October.
Whatever velocity was generated with the reopening of the economy in the spring is slowing.
With claims increasing to 898,000 for the week ending Oct. 10, according to data released Thursday by the Labor Department, it is clear that whatever velocity was generated with the reopening of the economy in the spring is slowing.
After including the 372,891 individuals who filed for federal Pandemic Unemployment Assistance, the number of people filing for unemployment insurance jumps to 1.27 million. Continuing claims declined to 10 million, which implies an insured unemployment rate of 6.8%.
It is important to note that California has taken a two-week pause in reporting first-time claims, so it is likely that the top-line data understates the increase in claims. This only adds to the pressure on policymakers to act with respect to another round of fiscal aid.
Now, with 25.2 million people on some form of unemployment insurance, policymakers need to move quickly to extend eligibility and benefits before the Dec. 31 deadline inside the CARES Act that covers roughly 13 million people who will be left without income once their eligibility expires.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.