Initial Claims Fall Under 1 Million, Remain Historically Elevated
For the first time since the economic effects of the coronavirus took hold, new applications for unemployment fell below one million, although they remain elevated by historic standards.
The Labor Department yesterday reported for the week ending Aug. 8, 963,000 Americans filed initial unemployment insurance claims (seasonally adjusted), down by 228,000 from the previous week and the first-time claims fell under one million since March 14.
The four-week moving average fell to 1,252,750, a decrease of 86,250 from the previous week’s revised average.
The advance seasonally adjusted insured unemployment rate—also known as continued claims—fell to 10.6 percent for the week ending August 1, a decrease of 0.4 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 1 was 15,486,000, a decrease of 604,000 from the previous week’s revised level. The four-week moving average fell to 16,169,500, a decrease of 454,500 from the previous week’s revised average.
“After factoring in the $600 weekly Federal top-up, the financial benefit to would-be workers was greater than pre-pandemic wages in 36 states, which created a short-term financial disincentive to return to work,” said Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “But it’s not as though people had a lot of choice; there are only 5.9 million jobs available at last count compared to 16.3 million unemployed. For every job, there are three people who need it.”
Quinlan noted the level of claims is still higher than it ever was pre-pandemic “and remains a glaring reminder that this recovery is only beginning, but it does feel good to be below 1 million.”
Doug Duncan, Chief Economist with Fannie Mae, Washington, D.C., said the report showed the labor market is continuing its gradual improvement, while noting the headline number does not include an additional 489,000 claims filed under the Pandemic Unemployment Assistance program. He said continued claims still remain at historically unprecedented levels and “continues to indicate that while improving, the total extent of joblessness and income curtailment remains significantly elevated.”