New jobless claims are likely to the most important weekly economic data for the next 3 to 6 months. They are going to tell us whether, as the number of those vaccinated continues to increase, there will be a veritable surge in renewed commercial and social activities and attendant consumer spending, leading in turn to a strong rebound in monthly employment gains.Three weeks ago I set a few objective targets: I am looking for new claims to be under 500,000 by Memorial Day, and below 400,000 by Labor Day.
This week initial jobless claims increased from last week’s pandemic lows. On a unadjusted basis, new jobless claims rose by 63,282 to 714,433. Seasonally adjusted claims rose by 61,000 from last week’s downwardly revised 658,000 to 719,000. The 4 week average of claims declined by 10,500 to 719,000, a new pandemic low.
Here is the close up since the end of July (recall that these numbers were in the range of 5 to 7 million at their worst in early April):
Because YoY comparisons would be with the worst of the pandemic, including widespread lockdowns, I have discontinued that graph as temporarily unreliable.
Continuing claims, which historically lag initial claims typically by a few weeks to several months, also made new pandemic lows yet again this week. Seasonally adjusted continuing claims declined by 46,000 to 3,794,000, while the unadjusted number declined by 90,696 to 4,142,940:
Nevertheless seasonally adjusted continued claims remain at levels last seen in March 2011.
I remain bullish that the ever-increasing pool of fully vaccinated adults – 54,500,000 as of yesterday, or 21% of the adult population – together with a seasonal shift from indoor to outdoor activities, is going to continue to result in a dramatic fall in jobless claims over the next few months.
Finally, based on the revisions of last week’s number, which results in a month over month decline in initial claims of roughly 40,000, a decline was last seen in August and October of last year – both of which produced job gains over 600,000, I also expect that the March jobs report will show a gain at very least on the order of last month’s 264,000 gain, and quite possibly much better – 600,000 to 1,000,000.