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Jobless claims make new pandemic lows; but the virus is back in control

Summary:
- by New Deal democratNew jobless claims are the most important weekly economic datapoint with regard to the effects of vaccination progress. At this point, it is also a test of how much the “delta wave” of new cases is setting economic progress back. Two weeks I wrote that, because progress in vaccinations had largely stalled, “that implies at least a stall in the decline in new claims, and - I actually suspect - an increase, perhaps to about 450,000 per week or so.”That certainly didn’t happen, at least this week. New jobless claims declined by 26,000 to 360,000, a new pandemic low. The 4 week average of claims set a new pandemic low, declining by 14,500 to 382,500. Here is the trend since last August:After peaking last year at roughly 7 million, claims declined sharply into winter,

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 - by New Deal democrat

New jobless claims are the most important weekly economic datapoint with regard to the effects of vaccination progress. At this point, it is also a test of how much the “delta wave” of new cases is setting economic progress back. Two weeks I wrote that, because progress in vaccinations had largely stalled, “that implies at least a stall in the decline in new claims, and - I actually suspect - an increase, perhaps to about 450,000 per week or so.”

That certainly didn’t happen, at least this week. New jobless claims declined by 26,000 to 360,000, a new pandemic low. The 4 week average of claims set a new pandemic low, declining by 14,500 to 382,500. Here is the trend since last August:

Jobless claims make new pandemic lows; but the virus is back in control

After peaking last year at roughly 7 million, claims declined sharply into winter, then rose again during the winter wave of infections. This year, from late February into May, claims had trended down an average of roughly 100,000 per month. This has slowed sharply since then, to a decline of only about 20,000 in the past 5 weeks in the 4 week average.

Continuing claims, which are reported with a one week lag, and lag the trend of initial claims typically by a few weeks to several months, have declined gradually about 15% from roughly 3,800,000 over the past 4 months, and also set another new pandemic low today at 3,241,000:

Jobless claims make new pandemic lows; but the virus is back in control

Some of this decline *may* be due to many States’ termination of all extended jobless benefits due to the pandemic.

A long term perspective shows that this week’s level is similar to early during other recoveries from most previous recessions, versus at 2,000,000 or below later in strong expansions:

Jobless claims make new pandemic lows; but the virus is back in control

My ultimate target for economic success from vaccinations has been for claims to average 325,000 or below. 

But at this point nearly all States are showing an increase in new cases, and overall the average daily count of new COVID cases has more than doubled from 11,300 to 25,255 in the past 22 days. Deaths have also started to increase again. Thus the virus is back in control, especially in the relatively unvaccinated States. How employers and potential customers will behave in response to that is very much open to question, and so I am skeptical that there will be a full return to employment until the disease has run its course.

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