This is the first truly terrible jobless claims report since the slowdown started. There will be even more job losses in January than in December, but investors will probably ignore this as the vaccines are set to stop the virus’ spread in the next few months (14.3 million vaccines have gone out in the US). The main questions are how deep this slowdown gets and when it ends. We could easily see sharp job creation starting as early as March or April.

Specifically, in the week ending January 9th, seasonally adjusted initial claims spiked from 784,000 to 965,000 which was way above estimates for 790,000 and the highest estimate which was 835,000. That’s the biggest jump since March 28^th and the highest amount since August 22^nd. Claims may have been suppressed in the prior week because of the holiday. This is the first week lapsing the benefits ending. Now we need to see the pandemic benefits start up again and the extra weekly $300 go out. This should significantly quell the worst aspects of this slowdown. That’s why we don’t expect a double dip recession.  

Non-seasonally adjusted claims rose 231,000 to 1.151 million which easily was above the seasonal adjustment factor of 186,000. For seasonally adjusted claims to fall next week, NSA claims need to fall at least 125,000 due to the adjustment. PUA claims were up 123,000. Remember, we said PUAs would spike when they were restarted because some states reported zero (they thought pandemic benefits would end because the stimulus wasn’t passed until the last minute). There were actually two new states that fell to zero and one state that went back to normal this week (Florida). Even though there was a spike in the overall number, this isn’t close to where it will be when the programs are back up in all states.

🇺🇸Initial #unemployment claims surge in w-e Jan 9:
- seasonal adjustment
- lapsing benefits end 2020
- weak labor market

Regular claims:
🛑965k (SA): ⬆️181k
🛑1151k (NSA): ⬆️231k

PUA claims (NSA):
🛑284k: ⬆️123k

🚨Very high 1.4 million **new** jobless benefits claimants! pic.twitter.com/moUIcUkSfU

— Gregory Daco (@GregDaco) January 14, 2021