Last week, the Labor Department reported first-time claims for unemployment insurance rose to 965,000, notably above the previous week’s total of 784,000 and the highest figures since late August. Levels surpassed economists projections and were most evident in states restricting business activities.
Still, claims are far better now that during the extraordinary weeks in March and April when most state and local governments enacted aggressive stay at home orders – see the large spikes in the Chart below. Clearly, no one wants to return to that environiment.
However the post-holiday surge in COVID-19 cases is a strong reminder that additional government restrictions may be forthcoming. President Biden’s recently announced trillion dollar COVID-19 stimulus package in fact suggests policy makers antipcate a turbulent 2021 first quarter. The package labeled, American Rescue Plan, calls for signficant increases in weekly unemployment benefits and direct payments of $1400 to individuals.
Jobless claims are unlikely to fall to pre-pandemic levels until a substantial proportion of the work-force receives vaccinations. If that occurs, the forecasts for the 2021 national economy are encouraging.