Weekly Initial Claims for Unemployment Benefits Fall to the Lowest Level Since March 2020
Initial claims for regular state unemployment insurance totaled 310,000 for the week ending September 4, a drop of 35,000 from the previous week’s revised tally of 345,000 (see first chart). This is the sixth decline in the last seven weeks and the lowest level of the pandemic.
The four-week average fell 16,750 to 339,500, also the lowest of the pandemic. A record number of openings continue to be reported across many industries and surveys of employers suggest finding and retaining workers remains one of the biggest challenges.
The surging number of Covid cases due to the Delta variant continues to cloud the outlook for economic growth. Furthermore, the combination of labor shortages and rising Covid cases may exacerbate materials shortages as well as logistical problems and sustain upward pressure on prices in the short term.
The number of ongoing claims for state unemployment programs totaled 2.663 million for the week ending August 21, a drop of 133,950 from the prior week. That is the 22nd consecutive week below 4 million and the fifth below 3 million since the start of the pandemic (see second chart).
Continuing claims in all federal programs totaled 9.268 million for the week ending August 21, a decrease of 121,807. That is the 15th consecutive week that Federal continuing claims have been below 12 million and the eighth week below 10 million (see second chart).
The latest results for the two programs put the total number of people claiming benefits in all unemployment programs, including all emergency programs, at 11.930 million for the week ended August 21, a drop of 255,757 from the prior week. The result is the 17th consecutive week below 16 million but is the fifth week close to the 12 million mark, averaging 12.001 million over that period (see second chart).
The labor market remains tight as weekly initial claims for unemployment benefits move lower and the number of open jobs hit a new record high in July. Employers are having a hard time filling positions and retaining workers, especially in low-wage jobs in hospitality and retail. The surge in new Covid cases creates uncertainty and likely contributed to the weak August jobs report. Businesses and consumers will adapt to the new Covid world but the waves of new cases will continue to cause havoc on economic activity.
Robert 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.
