The latest unemployment claims data rose again unexpectedly, with 742,000 Americans filing initial claims last week as coronavirus cases and deaths spiked around the country. The numbers were above what labor market observers expected and continuing claims also came in higher.
The numbers worry economists, even as good news about Pfizer and Moderna’s vaccine effectiveness in trials brought much-needed good news as daily COVID-19 cases top 170,000 and total deaths approach 250,000.
“When will it ever end this rising tide of joblessness,” mused MUFG’s Chris Rupkey in a grim note to clients. The joblessness and lack of stimulus are hurting the economy, he wrote, and pointed out that all of this “has the power to bring on another quarter of negative growth if the jobless count doesn't stop going up.”
“It's hard to believe the recession is over if workers keep losing their jobs at this rate,” Rupkey added. All in, with gig economy relief added, over a million people filed for some kind of relief, leading the economist to write, “What on Earth is going on?”
“The blame falls squarely on Washington where there is no attempt to fight the virus in a coordinated manner or to fight the recession by renewing and extending the unemployment benefits to the millions of jobless workers in the country,” Rupkey wrote. “Winter is coming and it is bleak and getting bleaker if you can't find a job.”
Other economists share Rupkey’s grim outlook. In a note of his own Thursday, Pantheon’s Ian Shepherdson said, "The rise in initial claims is more likely to be signal than noise, unfortunately," and that it's "not a one-time fluke."
“More likely, it captures the beginning of an upward trend which will persist until the Covid wave subsides,” he wrote. Once again, the virus controls the economy, underscoring the stakes for the vaccine and getting the virus under control through the methods at hand, like mask wearing.
Rising Google searches for unemployment claims raised a red flag
Shepherdson said that Pantheon saw the bad numbers coming based on rising Google searches this week for unemployment benefits and Wisconsin's daily releases of jobless claims (it’s the only state to release numbers every day).
Pantheon expects case numbers to peak in mid-December, though the fallout of Thanksgiving gatherings is hard to predict. "The outlook for December is clearly deteriorating, making it ever-clearer that Congress needs to act very soon, unless they believe that a wasteland in the services sector is a good base for the post-COVID economy."
Meanwhile, the Pandemic Unemployment Insurance and Pandemic Emergency Unemployment Compensation — programs created through the CARES Act to support workers who may not be eligible for benefits under traditional unemployment programs — are set to expire in six weeks, AnnElizabeth Konkel, an economist with Indeed.com, wrote in a note Thursday.
Konkel said that holiday hiring, which might otherwise provide job relief, is wrapping up shortly as businesses get in position for the season, and temperatures are dropping — which is bad for outdoor activity and heating costs.
“The combination of record coronavirus cases and the post-holiday winter months will likely be a grim time for the labor market,” wrote Konkel. “To lose unemployment benefits right after the holidays will only ratchet up the economic pain already felt by millions."
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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
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