As policymakers continue to negotiate over another round of fiscal aid, initial claims for unemployment insurance increased to 853,000 for the week ending Dec. 5, the U.S. Labor Department reported Thursday.
The risk around permanent scarring in the labor market is increasing.
While this likely overstates the trend because states needed to catch up on processing claims following Thanksgiving, there is simply no rational case to be made that the underlying condition in the domestic labor market is improving as the pandemic intensifies.
What is the underlying condition of the American labor market? There are officially 9.8 million unemployed people, 19 million on some form of unemployment insurance and millions who have exhausted their benefits.
If it was not clear before, it is very clear now that this condition demands policy attention in the form of fiscal aid. While we are very bullish on the economic outlook for the second half of 2021, the space between now and then is vast and the risk around permanent scarring in the labor market is increasing.
Continuing claims increased to nearly 5.76 million, and 427,609 filed for first-time Pandemic Unemployment Assistance (non-seasonally adjusted). The insured unemployment rate declined to 3.9%, which significantly understates employment dynamics in the United States.
The advance number of actual initial claims under state programs, unadjusted, totaled 947,504 for the week ending Dec. 5, an increase of 228,982 (or 31.9%) from the previous week. The seasonal factors had pointed to an increase of 92,333 (or 12.9%) from the previous week. There were 317,866 initial claims in the comparable week in 2019.
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