Jobless Claims Spiked

Jobless Claims Spike

Recent estimates only called for a modest increase in initial claims. I said that was wrong. The economy is weakening. The decline in the prior week was because of Thanksgiving. It’s impossible for the labor market not to slow when states are adding restrictions. The deaths per day are at a record high which is causing people to go out less.

Specifically, seasonally adjusted initial claims rose from 712,000 to 853,000 which beat estimates for 724,000, and the highest estimate which was 800,000. That’s the biggest increase since March. Despite this spike, value stocks didn’t fall on Thursday. Luckily, it also predicted that as stocks likely will ignore the weak economic data in December in anticipation of a virus-free economy.

Non-seasonally adjusted initial claims rose from 719,000 to 948,000 which is the highest since August 1st. This was the biggest weekly increase since the week ending March 28th which was the biggest increase of the recession. Claims aren’t going to increase this much next week. This is backed up data from the previous week. 

However, even if claims fall slightly next week, they will be quite high. PUA claims rose 139,000 to 428,000. This caused the total of PUAs plus unadjusted claims to rise 37%.

As you can see from the chart below, that’s the greatest increase in months. Of course, PUA data isn’t reliable. In Nevada, PUAs rose 53,000 which was a 6x increase. Even without that increase, this was the largest number of PUAs since September. Cleary, the labor market is getting worse even if the data is fuzzy. There are 13 million PUAs plus PUECs that will expire on December 26th.  

Senators Hawley and Sanders proposed $1,200 checks saying, "We will not leave this town until we have voted, up or down, on direct relief for working people." It shouldn’t be like this, but the political reality is if those checks go out, it’s unlikely we get unemployment benefits extended. This political theater has been going on for months. Luckily, it will end soon and the Senate election is in 25 days. Clarity is coming soon.

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