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Initial, Continuing Claims Drop; PUA Soon to Expire

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Mark Vickery
·4 min read
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Thursday, December 3, 2020

Ahead of today’s opening bell, fresh jobs data have hit the tape again. We’re in a fertile delta of employment figures for the latter half of this week, with yesterday’s private-sector payroll tally from Automatic Data Processing ADP having brought in 307K new jobs last month (276K from the Services sector) and tomorrow’s highly anticipated Employment Situation from the U.S. Bureau of Labor Statistics (BLS; estimates are for a headline of 440K new jobs and a 6.8% Unemployment Rate).

Initial Jobless Claims for last week came in significantly lower than expected: 712K versus a 780K estimate. This follows an upwardly revised 787K the prior week, and both weeks together basically represent the range-bound new claims we’ve witnessed since the week of October 25th. This is good news — the way the charts had been playing out over the previous three weeks, it appeared we were heading north of 800K new claims per week again, which is a level we hadn’t seen since October 11th.

Important to consider is that this latest survey came the week of Thanksgiving, which may contain several anomalies that make it hard to compare to other weeks. The only remedy for this is time: if we see these weekly numbers blossom back up over 750K or so by next Thursday, some trepidation on the employment front may trickle into market sentiment again.

Continuing Claims for two weeks ago (this metric reports a week in arrears) tell a much different story; it’s downward swoop on its chart from the week of September 13th onward is a thing of beauty, descending each and every week, from 12.75 million longer-term claims per week back then to 5.52 million in today’s report. This is a big drop from the previous week’s downwardly revised 6.09 million, and suggest the U.S. labor market is on more solid footing than the initial claims depict.

What’s missing from the Continuing Claims figures, however, is how many of these longer-term unemployed Americans are finding themselves on Pandemic Unemployment Assistance (PUA), which was part of Congress’ basic relief package of assistance for the pandemic era. The PUA has kept million of otherwise gainfully employed citizens from economic freefall. But the concern here is that it is scheduled to expire December 26th, the day after Christmas. Consequences for such an expiration are, in a word, dire.

Congress could decide to extend the program; in fact, it could do any number of things to add stimulus back into the economy deep in the throes of the second-wave of the coronavirus pandemic. Exactly one month removed from the General Election, there is no movement, no sense of urgency, from some of the major players on Capitol Hill. Bipartisanship has been a rare commodity in DC over the past several years; can key members of Congress somehow find common ground before economic devastation descends onto Main Street?

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