February 4, 2021 Reading Time: 2 minutes

Initial claims for regular state unemployment insurance totaled 779,000 for the week ending January 30, down 33,000 from the previous week’s revised tally of 812,000 (see first chart). Claims have eased back for three consecutive weeks since jumping in early January. Still, initial claims have continued to run in the 700,000 to 1 million range for 23 consecutive weeks and remain well above the pre-pandemic level of 212,000 in early 2020 (see first chart).

The four-week average fell slightly, off 1,250 to 848,250. The four-week average has drifted higher since hitting a low of 740,500 for the week of November 28, rising in eight of the last eleven weeks. Persistent initial claims at such a historically high level remain a threat for the labor market recovery and the economy.

The number of ongoing claims for state unemployment programs totaled 5.188 million for the week ending January 16, down 258,852 from the prior week. State programs had been trending lower since early March, but the downward trend has turned to a flattish trend since the week ending November 21 (see second chart). For the same week in 2019, ongoing claims were 2.076 million.

Continuing claims in all federal programs fell in the latest week following the prior week’s surge, coming in at 12.647 million for the week ending January 16, off 227,553 (see second chart).

The total number of people claiming benefits in all unemployment programs including all emergency programs was 17.836 million for the week ended January 16, down 486,405 from the prior week.

Government restrictions on consumers and businesses remain a significant threat to the outlook for economic growth. The development and distribution of vaccines is a very positive development and should eventually lead to sharply less government restrictions. In the meantime, the longer the virus continues to spread (along with the possibility of mutations prolonging the outbreak), consumers remain restricted, and businesses remain closed or limited, the more uncertain a labor market recovery becomes and the higher the probability of a slow and drawn-out economic recovery.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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