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PNC Chief Economist Gus Faucher: Initial UI Claims Still Stuck Above 700,000

Michigan Business Network
April 8, 2021 1:00 PM

pncfsg CroppedDespite Improving Labor Market
  • Initial claims for unemployment insurance rose somewhat in the week ending April 3; there was also a small increase in the four-week moving average. Layoffs remain extremely high.
  • The total number of people receiving some form of unemployment benefit remained extremely elevated, at above 18 million, in the week ending March 20
  • The labor market recovery is picking up in the spring thanks to stimulus and vaccines.

Initial claims for unemployment insurance increased by 16,000 in the week ending April 3 to 744,000. Claims for the prior week were revised up by 9,000 to 728,000. The four-week moving average of claims through April 3 rose by 2,500 to 723,750.

Initial claims have been stuck between 700,000 and 900,000, with a few exceptions, since August. Claims were around 200,000 per week in early 2020, before the pandemic came to the U.S. Initial claims skyrocketed to a peak of more than 6 million in April 2020, then fell through the spring and early summer of last year, before settling in well above their pre-pandemic level.

There has been a more substantial drop in initial claims under the Pandemic Unemployment Assistance program. Initial claims fell by more than 85,000 in the week ending April 3, to around 152,000 (not seasonally adjusted). This was the lowest number of initial claims under the PUA since the program started a year ago. Initial PUA claims rose to above 500,000 in early 2021 as coronavirus caseloads started to rise again but have fallen by about two-thirds over the past month.

There were a total 18.165 million people receiving some form of unemployment insurance in the week ending March 20, down by 51,000 from the previous week (not seasonally adjusted). This includes regular state unemployment insurance programs as well as pandemic-related programs.

After briefly falling to below 16 million at the beginning of 2021 before pandemic-related programs were reauthorized, total unemployment beneficiaries have been between 18 and 20 million for the past few months. Before the pandemic about 2 million people were receiving unemployment insurance benefits per week. There were about 32 million total beneficiaries at the peak in mid-2020.

The labor market recovery from the Viral Recession continues, but unemployment rate remains extremely elevated. There are more than 18 million people receiving some form of unemployment benefit, with no real improvement over the past three months. Initial claims for unemployment insurance also remain well above their pre-recession levels, with no real improvement over the past 8 months.

But the labor market is getting better. The economy added 916,000 jobs in March, the best month for employment growth since August 2020, when businesses were quickly reopening as the economy was coming out of the downturn. With vaccine distribution continuing and stimulus payments sent to many households in January and then again in March, economic activity is picking up from a lull in late 2020 and early 2021. Strong job growth will continue, and unemployment insurance claims will fall through the rest of 2021 as the economy improves.

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.