One of the best measures this year for economic recovery continued its positive trend this week, albeit incrementally on its topline. That trend continued today as the Department of Labor reported 709,000 weekly initial jobless claims, a drop of 48,000 from the week before and continuing a trend of declining churn. The more-reliable 4-week measure dropped 33,250 to 755,250, confirming a positive trend in the job market.

It’s good news, although the level of churn is still far too high to claim anywhere near a full recovery. With a second wave of COVID-19 cases and hospitalizations rolling across the country and governors issuing new stay-at-home guidelines, the question will be just how long the news will be good:

In the week ending November 7, the advance figure for seasonally adjusted initial claims was 709,000, a decrease of 48,000 from the previous week’s revised level. The previous week’s level was revised up by 6,000 from 751,000 to 757,000. The 4-week moving average was 755,250, a decrease of 33,250 from the previous week’s revised average. The previous week’s average was revised up by 1,500 from 787,000 to 788,500. The advance seasonally adjusted insured unemployment rate was 4.6 percent for the week ending October 31, a decrease of 0.3 percentage point from the previous week’s revised rate. The previous week’s rate was revised down by 0.1 from 5.0 to 4.9 percent.

Once again, the best news came in the sharply reduced level of paid benefits, emphasis mine:

The advance number for seasonally adjusted insured unemployment during the week ending October 31 was 6,786,000, a decrease of 436,000 from the previous week’s revised level. The previous week’s level was revised down by 63,000 from 7,285,000 to 7,222,000. The 4-week moving average was 7,575,750, a decrease of 653,000 from the previous week’s revised average. The previous week’s average was revised down by 15,750 from 8,244,500 to 8,228,750.

Even without seasonal adjustments, the news looks very good — for the moment:

The advance unadjusted insured unemployment rate was 4.4 percent during the week ending October 31, a decrease of 0.3 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 6,486,000, a decrease of 402,298 (or -5.8 percent) from the preceding week. The seasonal factors had expected an increase of 33,835 (or 0.5 percent) from the previous week. A year earlier the rate was 1.0 percent and the volume was 1,450,304.

That beat expectations, notes CNBC’s Jeff Cox:

First-time claims for unemployment insurance continued their decline last week, hitting another pandemic-era low in a sign that the labor market is gradually improving.

The Labor Department reported Thursday that jobless claims hit 709,000 for the week ended Nov. 7, down from 757,000 the week before. Economists surveyed by Dow Jones had been looking for 740,000 new claims.

This marked the fourth consecutive week that the total declined from the previous period, though claims remain above the pre-coronavirus pandemic record 695,000 in 1982.

“Over the short-term, the stock market is watching labor market data through the lens of stimulus prospects,” said Kenny Polcari, managing partner at Kace Capital Advisors. “Worsening jobs data strengthens the case for more stimulus and vice versa. More stimulus is usually welcomed by investors.”

If we’re looking at this through the lens of stimulus, then we have to account for what will be coming more than what happened in week ending October 31.  Yesterday the US set another new record of confirmed COVID-19 cases at 148,000+:

Nearly every state has seen a growth angle that is looking dangerous:

Virus cases are growing in nearly every U.S. state, according to a CNBC analysis of Johns Hopkins data. Infections are up 5% or more on a weekly basis in at least 47 states and D.C., according to the data.

Only Louisiana, Montana and Georgia remain out of the category as of Thursday, and they may not hold out for long.

  • Louisiana paused virus reporting on Wednesday for Veterans Day, but the state had been recording nearly 800 new cases a day on average — 25% higher on a weekly basis before the temporary pause.
  • Georgia’s numbers are still adjusting from a massive data dump of roughly 31,000 cases, backdated to Nov. 3. That’s skewing the week-on-week trend analysis.
  • Montana appears to be the only state truly below that 5% threshold, with an average of 873 new cases each day, 2.1% higher on a weekly basis.

With this data in mind, governors are adding new restrictions each day in a new effort to flatten curves. Hospitalizations are increasing as well, with some states — Minnesota included — starting to hit capacity limits. It’s as bad as it has been the entire year here (as I discovered personally this week):

The latest White House Coronavirus Task Force update ranks Minnesota 10th worst for its rate of new infections and lists 76 of 87 counties as “red zones” for viral spread. The states surrounding Minnesota — North Dakota, South Dakota, Wisconsin and Iowa — have the nation’s worst rates.

The underlying concern is to slow disease spread to keep pressure off Minnesota hospitals, which on Wednesday reported a record 1,299 patients with COVID-19 admitted to inpatient beds. That includes 282 patients in intensive care.

COVID-19 patients make up 25% of the more than 1,100 patients admitted to the state’s 1,457 immediately available ICU beds. That rate has increased from 15% a week ago. The state reports another 408 ICU beds could be readied within 72 hours if needed.

Minnesotans need to wear masks, avoid crowds, practice social distancing and stay home when sick, said Dr. George Morris of St. Cloud-based CentraCare, which reports that one-third of its hospitalized patients have COVID-19.

All of this indicates that more restrictions on in-person commerce are coming, and probably coming sooner rather than later. That will start sidelining workers again at some point, and with it entire businesses, too. So far retail commerce does not appear to be a big factor in transmissions, but consumers will start getting more and more reluctant to engage in it.

This will have to be part of the way that Congress looks at this through the prism of stimulus. Payroll-support programs and perhaps one more round of direct stimulus might be necessary to get us through a very socially-distanced winter season, unless vaccines can disrupt these escalating transmission curves. Now that the election is over, we can probably expect quicker action out of Congress –especially since Nancy Pelosi won’t have quite as much room to maneuver after January. The time to act on this is now.