Economy on fumes: Weekly jobless claims soar to 965K, paid benefits jump almost 200K

The five-month record of keeping initial weekly jobless claims below one million remains intact — but only barely. Despite expectations that the Phase 4 relief package might have contained the job destruction of new COVID-19 restrictions on commerce, new jobless claims soared by 181,000 to 965,000, far above expectations set by economists.

More worrisome is the reversal of paid jobless benefits. Those had been on a steady decline over the past several months even while the topline number had plateaued since late September. This week, however, the number fo people receiving paid benefits jumped back upward by nearly 200K, emphasis mine:

In the week ending January 9, the advance figure for seasonally adjusted initial claims was 965,000, an increase of 181,000 from the previous week’s revised level. The previous week’s level was revised down by 3,000 from 787,000 to 784,000. The 4-week moving average was 834,250, an increase of 18,250 from the previous week’s revised average. The previous week’s average was revised down by 2,750 from 818,750 to 816,000.

The advance seasonally adjusted insured unemployment rate was 3.7 percent for the week ending January 2, an increase of 0.2 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 2 was 5,271,000, an increase of 199,000 from the previous week’s unrevised level of 5,072,000. The 4-week moving average was 5,215,750, a decrease of 59,000 from the previous week’s unrevised average of 5,274,750.

Some of this might reflect pent-up filings from the past few weeks. Holidays, especially broadly celebrated holidays where businesses largely go dormant anyway, tend to produce delayed bounces or troughs like this in the first full normal week afterward. This bounce looks more significant than just a holiday adjustment, as CNBC points out that this is the highest level since August.

The culprit is pretty obvious, however:

Still, the number for the week ended Jan. 9 was another sign of economic turmoil brought on by restrictions in activity aimed at combating the virus spread. The total was the highest since the week of Aug. 22, when just over 1 million claims were filed.

Continuing claims also were higher, rising 199,000 to 5.27 million. That figure runs a week behind the weekly claims total and increased for the first time since late November. …

The increase in claims was spread across a handful of state, mostly those with more stringent restrictions on businesses.

Illinois, where Chicago has clamped down on restaurants, saw a jump of 51,280, according to unadjusted data. Other big gainers were California, which doesn’t even allow outdoor dining and saw its claims number rise by 20,587, a 13% increase. New York rose by 15,559.

However, several states with relatively loose restrictions also saw noticeable gains. Florida saw its claims more than double to 50,747, while Texas saw a 14,282 increase.

This is destruction brought on by government policies, not by organic economic issues. The pandemic shutdowns have cratered employment, and it’s worse where the shutdowns have been more draconian. The Phase 4 relief bill only applies a salve to those problems — it doesn’t solve them.

The real solution to this economic problem is scientific. Widespread vaccination against COVID-19 is the best way to safely reopen the economy, but thus far the government is off to a poor start. Reuters reported yesterday that the US has delivered 10 million first-dose vaccinations, but that’s only 3% of the population.

The problem in this case isn’t so much in Washington, but in the states themselves. Can a new recommendation by the CDC fix that?

The United States reached 10.2 million inoculations one day after the CDC and Trump administration gave new guidance to U.S. states on who should receive the shots first. Strict rules putting healthcare workers first in line had slowed the rollout. Now states are urged to vaccinate anyone over 65 as well.

California moved on Wednesday to do just that, designating all individuals 65 and older eligible to begin receiving vaccines, adding 6.6 million people to the rolls of those qualified to be immunized, Governor Gavin Newsom said.

The move bumps senior citizens, regardless of whether they have underlying medical conditions, to the top of the priority list for vaccine recipients, just behind front-line healthcare workers and residents and staff of nursing homes.

California, like many states, has struggled to use up as much vaccine as it received in initial allotments from the federal government, administering only about a third of the nearly 2.5 million doses shipped to the state as of Monday.

That’s 1.7 million first doses sitting on shelves that could be used to help lower community transmission rates if they went into arms of Californians. The data from Israel yesterday showed how effective even one dose can be within a fortnight of inoculation. Transmission rates declined by 33%-60% just from that first dose after 14 days with the Pfizer vaccine, and Moderna’s Phase 3 trial data had shown similar results.

The solution to this economic problem, therefore, is to get these doses into everyone’s arms as fast as possible rather than stage them and delay that distribution. That would give us more room to reopen commerce and start reversing the destruction of employment that also has serious health consequences for the population, and would still help protect more vulnerable members by lowering community transmission rates and spread. If the incoming Biden administration wants to come up with a “stimulus,” that’s the injection this economy needs most.

Trending on HotAir Videos

David Strom 5:20 PM | April 15, 2024