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. Three 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.”
This week’s number may just be noise, or maybe evidence of such an increase. New jobless claims rose by 51,000 to 419,000, the highest number in 9 weeks. The 4 week average of claims also rose – slightly – by 750 to 385,2500. Here is the trend since last August:
After trending down by roughly 100,000 per month from late February into May, as vaccinations increased quickly, the rate slowed sharply ever since, to a decline of less than 20,000 in the past 6 weeks in the 4 week average.
On the other hand, 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, did set another new pandemic low today at 3,236,000:
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:
My ultimate target for economic success from vaccinations has been for claims to average 325,000 or below. But with the Delta variant surging, and new COVID cases rapidly increasing to near last summer’s highs, I suspect that both employers and potential customers will become more cautious again. I remain skeptical that there will be a full return to employment until the disease has run its course.