Health of National Economy – Weekly Jobless Claims

Last week, the Labor Department reported first-time claims for unemployment insurance rose to 965,000, notably above the previous week’s total of 784,000 and the highest figures since late August. Levels surpassed economists’ projections and were most evident in states restricting business activities.   

Still, current unemployment claims are far better now than during the extraordinary weeks in March and April when most state and local governments enacted aggressive stay-at-home orders – see the large spikes in the chart below.  No one wants to return to that environment. 

However, the post-holiday surge in COVID-19 cases is a strong reminder that additional government restrictions may be forthcoming.  President Biden’s recently announced trillion-dollar COVID-19 stimulus package suggests policymakers anticipate a turbulent 2021 first quarter.  The package labeled, American Rescue Plan, calls for significant increases in weekly unemployment benefits and direct payments of $1400 to individuals.  

Jobless claims are unlikely to fall to pre-pandemic levels until a substantial proportion of the workforce receives vaccinations.   If that occurs, the forecasts for the 2021 national economy are encouraging.  

For further details see: Jobless claims surge to highest weekly total since August