This week’s jobless claims numbers overshot expectations as another 965,000 Americans filed for unemployment, more than the 789,000 expected. As ING’s James Knightley wrote, “an awful outcome.”
Along with the rising death toll and caseload of the coronavirus, this number is a stark reminder of how bad things still are during the pandemic despite vaccines slowly rolling out.
The surprise to the downside in the numbers indicate a potential danger point, Chris Rupkey of MUFG wrote in a note circulated Thursday morning.
“The economy is losing jobs and altitude only two weeks into the new year,” he wrote. “This points to the danger of negative real GDP growth in the first quarter of 2021.”
In addition to the near-million new claims, state data showed increases in unemployment claims, Rupkey wrote, which “provides additional confirmation that the labor market recovery is stalling.”
With 10 million people still out of work, Rupkey stressed that “the economy faces immense challenges early in the new year as the upward trajectory of new coronavirus cases and state lockdowns is forcing employers to lay off workers.”
All of this makes a stronger case for more stimulus relief after the $908 billion passed at the end of December, Rupkey added. “The economy clearly needs additional support from Washington because right now rising jobless claims tells us the labor market recovery has stalled and the direction is full-tilt down,” he wrote.
Pantheon’s Ian Shepherdson wrote that he expected claims not to worsen but to continue sideways until restrictions ease up on the services sector as "vaccination brings herd immunity into sight." In Knightley’s estimation, that will be many more months at the rate things are going.
That, ultimately, will be the way out of this mess. “There will be no real improvement in the jobs market until Covid containment measures are relaxed and businesses have the confidence to hire,” Knightley wrote.
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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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