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PNC Chief Economist Gus Faucher: Initial UI Claims Below 300,000 Again

Michigan Business Network
October 21, 2021 1:00 PM

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As Labor Market Continues to Heal

  • Initial claims for unemployment insurance fell slightly in the week ending October 16 and were below 300,000 for the second straight week. Initial claims are approaching their pre-pandemic level of around 200,000.
  • The total number of unemployment insurance recipients was down to around 3 million in early October. Millions lost their access to benefits in early September with the expiration of special pandemic-related programs.
  • The number of continued claims under regular state programs is falling as the unemployed start to find jobs.

Initial claims for unemployment insurance fell by 6,000 in the week ending October 16, to 290,000. This was the second straight week of claims below 300,000, the first-time claims have been that low since early 2020, before the pandemic came to the United States. Claims for the previous week were revised higher by 3,000, to 296,000. The four-week moving average of claims for the week ending October 16, which smooths out some of the volatility, fell by 15,250 from the previous week, to 319,750. This also is the lowest level for the four-week moving average since the beginning of the pandemic.

Initial claims have been moving gradually lower over the past couple of months and are now within spitting distance of their pre-pandemic level of slightly above 200,000 per week. Initial claims jumped in early 2020 to more than 6 million in April of last year as the pandemic came to the U.S. They then fell quickly to around 900,000 per week by early August 2020, then stabilized at between 700,000 and 900,000 between August 2020 and March 2021. This spring claims fell gradually but steadily before stabilizing at around 400,000 per week, and then started to decline again in August.

There were a total of 3.279 million people receiving some form of unemployment benefit in the week ending October 2 (not seasonally adjusted), down from 3.649 million the previous week. The number of people receiving unemployment benefits has dropped sharply from around 12 million per week in August and early September. Special pandemic-related programs that greatly expanded eligibility for unemployment insurance expired in early September, with millions of people losing access as a result. Even with the recent large declines, total continued claims in the week ending September 18 were still more than 50% higher than their pre-pandemic level of around 2 million. Total continued claims peaked at 33.2 million in June 2020.

There were 2.481 million people receiving regular state benefits in the week ending October 9, down from 2.603 million the previous week. The four-week moving average of state continued claims was 2.656 million in the week October 9, down from 2.738 million the previous week. These are the lowest levels for both weekly state continued claims and the four-week moving average since March 2020, before the pandemic wreaked havoc on the labor market.

State continued claims peaked at more than 23 million in May 2020 but are still well above their pre-recession level of around 1.7 million. With most people receiving benefits via pandemic-related programs until recently, continued claims under regular state programs had been less important as a labor market indicator. But now that those pandemic-related programs have expired, regular state continued claims are more relevant.

With the expiration of benefits for millions of recipients now in the rear-view mirror, it is possible to draw some updated conclusions about the labor market. It continues to improve, with layoffs steadily falling. The number of beneficiaries under regular state programs is falling as well, likely due to both some participants using up their eligibility, and others leaving unemployment for work. The total number of beneficiaries has plunged by almost 9 million since eligibility expansions expired in early September. Presumably many of these workers will be looking for work soon, if they haven’t already started to; this will help alleviate some of the current labor shortages in the economy.

 

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.

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Michigan Business Network is an online broadcasting company that provides knowledge, news, and insights into Michigan’s businesses, industries, and economy.