; but pandemic is a worsening near-term headwind
In the week ended November 7, initial claims for unemployment insurance fell 6 percent before seasonal adjustment or 3 percent after seasonal adjustment to 723k not seasonally adjusted or 709,000 seasonally adjusted. Initial claims for PUA fell 64,000 on the week to 298,000 not seasonally adjusted.
In the week ended October 31, insured unemployment fell to 6.8 million seasonally adjusted or 6.5 million not seasonally adjusted; the drop in insured unemployment in part reflects UI beneficiaries exhausting their benefits under standard programs and rolling into state extended benefits and PEUC. Total claimants to all UI programs fell 374,000 on the week in the week of 10/24, less than the 1.1 million decline in the prior week.
This is a particularly conflicted moment for the economic recovery. On the one hand, news of effective vaccines that could be available soon is very positive for expectations for growth in 2021. This will have a large impact on businesses that need people close to each other to be profitable; these businesses will lay off fewer workers and could even start rehiring in anticipation of better times ahead.
On the other hand, the pandemic is forcing parts of the United States to re-enter partial lockdowns, closing restaurants, bars, and other congregate businesses. Many schools that resumed in-person instruction are returning to remote learning, which will pull caregivers from the workforce; this burden falls disproportionately on women. The uncontrolled pandemic is a large downside risk to growth in the next few weeks and months. The latest unemployment claims data signal that this downside risk had not yet started to drag on growth in early November, but the other foot could still drop.
The key question is how large of a blow will the economy suffer between now and when a vaccine allows a return to more normal life. The outcome still depends on the course of the pandemic and of fiscal stimulus, and the prospects for both before year end are discouraging.
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