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The US job market is gradually recovering from lockdown shock

Another 881,000 Americans filed initial claims for benefits last week on a seasonally adjusted basis. Normally, the fact that so many people filed for unemployment last week would not be a reason to celebrate. But these are not normal times, and this is another sign that the jobs market is gradually recovering.

Continued jobless claims, which count people filing for benefits for at least two weeks in a row, also offered some good news: It stood at a seasonally adjusted 13.3 million, falling by more than 1 million from the prior week.

However, a wonky aspect in the report makes it tricky to track the progress of the jobs recovery: The Labor Department changed its methodology for seasonal adjustments starting with this report. Usually, seasonal adjustments are designed to smooth the data and make it more easily comparable. But during the pandemic’s unprecedented effect on the labor market they have added some noise to the data.

The adjustment changes mean that we can’t compare this week’s seasonally adjusted data to that of last week. To get a good look at how the number of claims has changed over time, we should look at the unadjusted data.

The Labor Department will again review its adjustment models at the start of next year.

Without the adjustments, claims for unemployment insurance actually rose by about 7,500 to 833,352.

On top of that, 759,482 Americans filed claims under the government’s Pandemic Unemployment Assistance Program (PUA), more than 150,000 more than in the prior week. The program allows people usually not eligible for jobless benefits to apply during the pandemic.

Adding those numbers together, first-time jobless claims amounted to nearly 1.6 million, more than in the prior week.

Adding up all of the people who received unemployment benefits under the various government programs, more than 29 million Americans got jobless aid in the week ending August 15. That’s an increase of more than 2 million people versus the prior week.

It’s difficult to make sense of this. The headline numbers seem to be moving in the right direction as the US jobs market is gradually recovering from the pandemic lockdown shock. That said, millions of people continue to rely on state benefits to make ends meet while Congress is squabbling about a next round of stimulus.
The weekly $600 jobless benefit supplement that was part of the CARES Act ran out at the end of July. Since then, President Donald Trump signed an executive order to boost unemployment benefits by a weekly $300, doing so by diverting disaster relief money from the Federal Emergency Management Agency. States can add an optional $100 per week, provided they can afford it. That said, it might take some time for these payments to actually come through.

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