Unemployment Claims Dip Slightly: Looking Ahead To 2021

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.

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