First-Time Jobless Claims Improve Slightly, But Underperform Economists’ Expectations

( The hits keep on coming.

The Department of Labor said Thursday that first-time jobless claims reached 840,000 last week when seasonally adjusted. While that was down slightly from the 849,000 claims the week before, it was still much higher than most economists were expecting.

Optimists will say that even an ever-so-slight improvement in job numbers is good. Pessimists, on the other hand, will look at winter ahead and worry about what’s to come.

In a note to his clients, Bleakley Advisory Group’s chief investment officer Peter Boockvar wrote:

“Let’s hope we soon break below the 800k mark in initial claims soon because hanging around the 800k+ level is still not a good place to be, especially going into the winter.”

Warm weather has served as somewhat of a lifeline for those in the leisure and hospitality sectors. Restaurants and bars, for example, have been able to at least reel in some revenue from outdoor dining that most states have allowed — in albeit limited capacity — since early summer.

As the weather cools throughout the country, though, the prospects of continued crowded outdoor dining options aren’t as strong. And as people begin to turn indoors more often — and possibly get together with people outside their household — the possibility of the all-too-familiar second wave of the pandemic strengthens.

Unemployment claims under the Pandemic Unemployment Assistance Program reached 464,437 last week, the Department of Labor reported. That means that, combined, first-time claims for both traditional unemployment and the PUA program reached 1.3 million last week.

The PUA program aims to support workers who aren’t normally eligible for the traditional unemployment benefits. This includes self-employed workers, as well as workers who can’t work because of coronavirus-related reasons.

On the positive side, the number of continued unemployment claims outperformed economists’ expectations. This category of claims, which counts people who’ve filed for unemployment benefits for at least two straight weeks, dropped by 1 million to 11 million total.

Still, some economists warn that a drop-off in continued unemployment claims could also be due to the possibility that people are no longer eligible to receive benefits.

Many states provide unemployment benefits up to 26 weeks, after which some people could become eligible for other programs. One of those programs, called Pandemic Emergency Unemployment Compensation, provides jobless benefits for another 13 weeks.

Both the PEUC and PUA programs are currently set to end at the end of 2020. Without Congress coming to an agreement to extend those programs — and without the White House signing off on it, too — millions of Americans could be left scrambling all at once when the clock strikes midnight on New Year’s Eve.

As Gus Faucher, the chief economist at PNC, said:

“The next concern is that end of the bonus unemployment insurance payments, coupled with the end of negotiations over additional fiscal stimulus, could lead households with unemployed workers to cut back on their spending.”

This could exacerbate an already large problem in the economy.