The number of workers filing for Pandemic Unemployment Assistance is on the rise again. The United States labor market is sending troubling signals. Moreover, there are signs about the resurgence in COVID-19 cases, and it is weighing on economic recovery.
The latest weekly in initial jobless claims was out on Thursday. It showed that while claims declined to 1.31 million for the week ending on July 4, an increasing number of workers filed for PUA (Pandemic Unemployment Assistance) for the fourth straight week.
1.04 million people filed Pandemic Unemployment assistance for the first time last week. This is an increase of 880,000 from two weeks prior and up from 42,000 over the prior week.
Ian Shepherdson works at Pantheon Macroeconomics. He is a chief economist there. He said that the news behind the headline numbers covers only regulated state unemployment insurance programs. Therefore, this is disconcerting.
The number of people claiming PUA (Pandemic Unemployment assistance) would likely be the self-employed, gig workers, freelancers, and other people who do not qualify for regular state programs. These are the reasons why the number has increased for the past four weeks.
Shepherdson adds that this suggests that renewed slowdown in the West and the South hits non-traditional workers harder than those in regular payroll jobs. After falling in late May and early June, continuing Pandemic Unemployment Assistance claims are now rising as well.
Last week, the number of workers filing continuing claims for unemployment insurance decreased to 18.06 million. Thus, this is a positive sign of recovery in the labor market. Nevertheless, we can also see a more negative story. This is, if we count those filing continuing claims under PUA instead of the traditional unemployment umbrella.
Pandemic Unemployment Assistance
James Knightley works in ING. He is a chief international economist there. On Thursday, he said in a note that the total number of people who claim benefits under ALL programs rose to 32.9 million. This is up 1.4 million on the week. Thus, a broader range of people qualify for benefits under the PUA, which had 14.4 million claimants as of the week ending on June 20.
Nevertheless, Knightley added that the data only serves to illustrate the ongoing extreme stress in the jobs market. Thus, this suggests unemployment is close to twenty percent, in comparison to the 11.1% currently listed as the official rate.
Last week, the June jobs data showed some 4.8 million jobs were added to the economy last month. This is a sign that after a historic drop in March, employers seem to be slowly but surely re-adding to their payrolls. On Thursday, Nasdaq hit a record high. Doubts concerning the durability of the strong economic rebound of the spring rise among investors. Thus, stocks came under pressure, and the 10-year Treasury yield fell.
The market has had some less-than-stellar readings regarding the health of the consumer. Alongside this, there is a softening in data out of the labor market.
Credit card data from JPMorgan Chase updated on Thursday. The information revealed a plateauing in consumer spending over the last two weeks. This happened after a mostly unabated increase through mid-June once lockdown restrictions eased.
