Initial unemployment claims rose for the first time since March 28
Job Warning Lights Flashing
Leading claims data flashed a huge warning sign about jobs today.
Initial claims rose from 1.307 million to 1.416 million, an increase of 109,000. This was the first rise in 16 weeks, a signal that the jobs recovery may be over.
Continued State Claims
Note: My Initial Claims and Continued Claims charts are Seasonally-Adjusted. The following PUA and Totals are NOT Seasonally-Adjusted.
Four Continued Claim Factors
- Continued claims lag initial claims by a week.
- People can find a job and drop off the unemployment rolls.
- People can expire their benefits and drop off the rolls.
- People can retire and drop off the rolls.
We are not yet at the point where state benefits have expired according to the Center on Budget and Policy Priorities as explained below,
Unemployment Compensation Basics
- Workers in most states are eligible for up to 26 weeks of benefits from the regular state-funded unemployment compensation program,
- Six states provide fewer weeks and one provides more.
- Under the CARES Act responding to the COVID-19 pandemic, all states provide 13 additional weeks of federally funded Pandemic Emergency Unemployment Assistance (PEUC) benefits to people who exhaust their regular state benefits.
- There are additional weeks of federally funded EB in states with high unemployment (up to 13 or 20 weeks depending on state laws).
- The maximum weeks of Pandemic Unemployment Assistance (PUA) for exhaustees equals 39 minus the number of weeks of regular UI and Extended Benefits (EB) received.
- No PEUC or PUA is available after December 31, 2020.
State Exceptions
- Massachusetts provides up to 30 weeks of UI except when a federal extended benefits program is in place (as it is now) or in periods of low unemployment (as was the case through February), when the maximum drops to 26 weeks.
- Montana provides up to 28 weeks of UI.
- Michigan normally provides up to 20 weeks of UI, but in the COVID-19 emergency that has risen to 26 weeks.
- South Carolina and Missouri provide up to 20 weeks of UI.
- Arkansas provides up to 16 weeks of regular benefits.
- Kansas was providing 16 weeks of UI before COVID-19, but that has been extended to 26 weeks through April 2021;
- Alabama currently provides up to 14 weeks of UI for new enrollees, with an additional five-week extension for those enrolled in a state-approved training program;
- Georgia was providing 14 weeks of UI, but in the COVID-19 emergency that has risen to 26 weeks;
- Florida currently provides up to 12 weeks of UI; and
- North Carolina currently provides up to 12 weeks of UI.
Nearly all of the improvement in continued claims is due to people finding jobs but people may have dropped off the rolls in Florida, North Carolina, and Georgia.
State Claims Provide Incomplete Picture
State claims do not provide a complete picture because many people are not eligible for unemployment insurance.
For example, self-employed are not eligible for state unemployment insurance even though they pay into the system.
The self-employed and small businesses were eligible for loans that in some conditions will not have to be paid back. The self-employed are also eligible for 13 weeks of Pandemic Emergency Unemployment Assistance (PEUC) but that may have expired.
Primary PUA Claims
Primary PUA covers those who are not eligible to make state claims. The report lags initial claims by 3 weeks and continued claims by 2 weeks.
Based on state initial claims and state reopenings in reverse, I expect this number to jump in the weeks ahead.
All Continued Claims
All continued claims is the sum of state continued claims plus PUA claims and all other Federal programs.
All claims have topped 29 million for two months. There was little improvement in the current report.
Nearly 32 million people are collecting some form of unemployment insurance and as noted above I expect the number to rise.
Federal Benefits
About 25 million unemployed workers are on the last week of the expanded federal unemployment benefits. They get a monthly check of $600 and will soon only receive state unemployment benefits, which average $378 per week.
If not extended, this will be a big hit to the incomes of millions. Republicans, especially Trump, do not want to extend this benefit because many make more being unemployed than they did working.
Instead, Trump proposes a payroll tax cut (see point 3 below), but Republicans are balking at that too.
This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.
Recommended Content
Editors’ Picks
![AUD/USD: Initial contention emerges near 0.6680](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/AUDUSD/australian-currency-23690700_XtraSmall.jpg)
AUD/USD: Initial contention emerges near 0.6680
AUD/USD regained some balance and reclaimed the area beyond the 0.6700 barrier, managing to rebound from earlier two-week lows in the 0.6685-0.6680 band on the back of renewed weakness in the US Dollar.
![EUR/USD came short of another test of 1.1100](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/usd-eur-banknotes-58361490_XtraSmall.jpg)
EUR/USD came short of another test of 1.1100
EUR/USD found some fresh legs in the data-driven pullback in the Greenback, rebounding to the boundaries of 1.1100 the figure amidst expectations that the Fed might reduce its rates by 50 bps in September.
![Gold battles to regain the $2,500 mark](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/safe-investment-gm147322399-17568598_XtraSmall.jpg)
Gold battles to regain the $2,500 mark
After touching its lowest level since mid-August near $2,470, Gold stages a rebound and trades near $2,500. The benchmark 10-year US Treasury bond yield stays in the red below 3.8% after US data, providing a lift to XAU/USD.
![Bitcoin extends losses, risking further declines if it closes below $56,000](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bit-coin-symbol-flag-3d-illustration-59931110_XtraSmall.jpg)
Bitcoin extends losses, risking further declines if it closes below $56,000
Bitcoin (BTC) extends its decline by 1.5% on Wednesday, following the rejection from the key resistance level on Tuesday and hurt by a drop in the US stock market. This downtrend may persist if BTC falls below the $56,000 support level, especially as US spot Bitcoin ETFs saw an outflow of almost $290 million.
![Canada Interest Rate Decision Preview: BoC expected to cut interest rates by 25 bps on September 4](https://editorial.fxstreet.com/images/Macroeconomics/CentralBanks/BOC/Bank_of_Canada_2016_XtraSmall.jpg)
Canada Interest Rate Decision Preview: BoC expected to cut interest rates by 25 bps on September 4
There is widespread expectation that the BoC will lower its policy rate for the third consecutive meeting on September 4. Mirroring previous decisions by the central bank, this move would most likely be of 25 basis points, taking the benchmark interest rate to 4.25%.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.