Unemployment Claims Dip Slightly: Looking Ahead to 2021

Mish

Initial unemployment claims dipped slightly in the final week of 2020 but claims are still very elevated. Moreover, the 4-week moving average rose.

Holding Pattern

Initial claims fell from 806,000 to 787,000 in the last week of 2020.

They have largely been in an elevated holding pattern since the beginning of September. In that period the low was 711,000 on October 31, and the high was 893,000 on September 5.

4-Week Moving Average of Initial Claims

4 week moviing average Initial Claims in 2020  Dec 31 Report

In what might be an ominous sign, the 4-week average bottomed on November 14 at 743,500 and has generally been rising since.

The 4-week average ticked up again in the final week of the year to 836,500.

Continued Unemployment Claims 

Continued State Unemployment Claims in 2020  Dec 31 Report

Continued claims represents the number of people in regular state unemployment programs.

The number is a huge distortion of reality because people fall off the rolls as benefits expire.

When people exhaust state benefits they roll into PEUC benefits or PUA benefits, and in some cases back into state benefits.

Millions of people exhausted their PEUC and PUA benefits as well. 

Pandemic Emergency Unemployment Claims (PEUC)

PEUC Claims in 2020  Dec 31 Report

PEUC benefits kick in after people have exhausted regular state benefits. 

PEUC counts are generally accurate as states do a good job of weeding out applicants because the states, not the Federal government, are on the hook.

There was a big jump in PEUC claims in September because that is when people in some states exhausted their state unemployment benefits.

The acceleration flattened in November as people exhausted their PEUC benefits as well.

Thus, although accurate, the current count of nearly 4.8 million understates the problem. 

Pandemic Unemployment Assistance (PUA) Claims

Primary PUA Claims in 2020  Dec 31 Report

PUA claims cover part-time workers, the self-employed, and others who do not qualify for regular state benefits.

The PUA program is rife with fraud, double-counting, and reporting errors.

That said, some percentage of PUA claims are not fraudulent.

But fraudulent or not, some people have exhausted all of their PUA benefits.

Fraud aside is the number of people collecting benefits closer to 9 million, 7 million, or 5 million?

No one seems to have the answer, typical for a Federal program rife with graft. 

All Continued Claims

All Continued Claims in 2020  Dec 31 Report

All continued claims dropped in the final week of 2020 to 19.564 million.

It is the total of all the above except the initial claims charts. 

Since it contains PUA, no one really knows what the number is. Nor would we know how much fraud is in the number, even if we did have a better handle on the number. 

Expired Benefits

Millions of people used up all their benefits so the PEUC and continued claims numbers are artificially low. 

It's difficult to say if PUA is low due to expired benefits or high due to double counting errors. 

Perhaps it balances out.

What About the Vaccines?

Vaccines are an unknown as are additional state lockdowns due to the new, more viral Covid strains circulating.

Where to in 2021?

Congress extended and Trump just signed an extension to PEUC and PUA. 

As a result, some people who expired all their benefits are again eligible for benefits through March or April. 

Thus, I expect the continued claims, PEUC, and PUA numbers to tick up again. Then it's wait and see on lockdowns and the vaccines.

For a discussion of the extended benefits and amounts, please see Trump Signed the Bill, What Unemployment Benefits Are Extended?

Best wishes to all in 2021.

Mish

Comments (24)
No. 1-14
PecuniaNonOlet
PecuniaNonOlet

We are rounding the corner, trump disaster almost over. Good times are here again!

Realist
Realist

The US economy, and job levels are stuck in the mud until the pandemic is properly dealt with. My crystal ball is as cloudy as ever, but things should begin to look better for the economy in the second half of 2021, because of vaccinations. As for the stock market, gold, bitcoin, etc, I have no idea. That is why I remain diversified.

Again; if you want to make a serious dent in US unemployment, re-training would certainly help.

Happy New Year! Wishing everyone the best in 2021.

Dodge Demon
Dodge Demon

Retrain to be a Counterfeiter. Print experience acceptable, but fluency in digital preferred. Send applications to J. Powell.

JoeJohnson
JoeJohnson

The market is expecting a 3rd stimulus by spring of 2021 ans judging by tight Georgia polling it might get it. It will vomit if it doesn't get it, Fed will start buying limited munis by EOD. We are entering secular inflation.

numike
numike

The Mutated Virus Is a Ticking Time Bomb There is much we don’t know about the new COVID-19 variant—but everything we know so far suggests a huge danger. WE ARE SO SCREWED!! https://www.theatlantic.com/science/archive/2020/12/virus-mutation-catastrophe/617531/

njbr
njbr

This is the final gift from an administration that is headed by a guy who has had a record of repeated failure.

I heard all summer long about the vaccine and its warp-speed roll-out. Military standing by ready to do their duty. 100 million vaccines avalable by election day, then 100 million by the end of the year. Later and more quietly, revised down to 40 million doses by the end of the year. Actuality ends up with 14 million doses and only 2 million administered.

Turns out the plan really is no plan at all.

Our eff'n pandemic task force says nothing, does nothing related to the UK varient, and hopes that you don't pick up on the idea that if it was picked up in a couple of random cases in the US, that probably means it's established in the US and already spiking cases in the US.

Meanwhile because of the mutation, the UK puts 3/4 of the population on Tier 4 lockdown and is developing a new Tier 5 lockdown. Ireland is shut down too, because of this.

We're always been a couple weeks behind Europe and the UK in our timeline on this, so imagine, oh say, on January 20th--3 weeks from today--what a shitshow of a newly fierce pandemic will happen in this woefully unprepared beautiful country of ours.

It really is "hair on fire" time.

njbr
njbr

The Scientific Advisory Group for Emergencies, the body which advises ministers on the COVID pandemic, delivered the stark new advice at a meeting last week, an adviser familiar with their conclusions said.

Led by the government's Chief Scientific Adviser Patrick Vallance, SAGE agreed that, because of the prevalence of a new strain of the virus identified in the U.K. in the autumn, the reproduction rate — known as R — would surge further above 1 in January even if the prime minister implements another November-style national lockdown in the New Year.

In other words, the experts' advice to Johnson was that a New Year national lockdown in England identical to one he ordered in November — during which schools remained open — would not be enough to keep the virus under control, and that even stronger measures would be needed.

SAGE's advice was that the R rate might be kept below 1 if schools stay closed in January. The advisory body found that closing secondary schools would have a bigger impact than shutting primary schools.

Last summer, the prime minister said it was "vitally important" that children go back to school, after many were taught virtually between March and the summer holidays. Earlier last week, however, Johnson told a Downing Street press conference the government would stick to the plan to stagger the reopening of schools "if we possibly can."

At the same SAGE meeting, the committee also expressed increasing alarm about a second new strain of COVID believed to have traveled to the U.K. from South Africa. The scientists told Johnson that the South African strain is spreading even more quickly than the new strain identified in Britain, and that its mutations raise concerns about immunity. This has become a major concern among government scientists, a Whitehall official said.

Lance Manly
Lance Manly

I am just looking forward to the Jan 6th s-show now that Hawley is on board. Watching probably 40 senators vote to overturn the will of the people, priceless.

njbr
njbr

Horse says, "What barn-door?

Our eff'n incompetent pandemic task-force at work. You would think that the leadership, oh ffs, there is no leadership that cares...

Eddie_T
Eddie_T

Looking forward to 2021:

I believe the most dangerous time for my healthcare employees is the next 2-4 weeks, because current levels of community spread here are quite high, and we are having more close calls with asymptomatic people who test positive after visiting our office. So far, only two of us have been able to be vaccinated, myself and my daughter, who got that perk as a result of being a hospital volunteer last summer.

We seriously hope that the rest of our team can get our first vaccination this next week, but so far the roll-out (other than in hospitals) is quite slow. Not even my friend who works in hospice care and visits multiple long-term care facilities every week has been scheduled by her employer for her immunization.

My gut tells me that we will see the inevitable consequences of missed rents and missed mortgage payments begin to affect the housing market, and that some areas will see the consequences of that more than others.

My guess is that we will see the usual pattern here of new home builders gearing up to go gangbusters to meet the demand of so many people moving here from other areas.......until that results in oversupply, driving prices back down. That might be another year. Right now inventories are still at historic lows, and builders can’t build houses fast enough.

I am looking at adding up to three new properties to my little portfolio while interest rates are favorable...but I’m trying to wait a bit longer to sell the one that will be 1031 exchanged to help capitalize the new ones. From experience I know that the 180 days allowed to find new properties and close on those can be a very short window. Having a good buyer's agent helps.

All the pump primers for continued asset inflation are in place. I expect stocks to soar....but I still don’t want to own them. I don’t care to own gold either, although I could make a case for it.....I think RE here is a better place to put investment money.
Gold is more insurance than investment in my view.

All bubbles eventually pop, and when the overinflated equites market finally does correct (probably not this year) all asset classes will take a hit....but the way that plays out will be different for some asset classes than others. And for RE in particular, it will depend on what particular market you’re in. There will be winners and losers. I still think owning tangible assets is one way to hedge the inevitable consequences of all the Fed market manips.

I don’t think it’s a good time to be heavily leveraged...in anything.

Happy New Year. We spent a quiet New Year’s Eve at home, just the missus and myself, and visited with our kids on our family chat channel. I made the guacamole.

Eddie_T
Eddie_T

Spot on. The pharmacies, who have been given the allotments and tasked with vaccinating the public, are dragging their feet. Could money have something to do with that?

I love The Texas Tribune..

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annasarma

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