Below is a complimentary research note from our Financials analyst Josh Steiner. We are pleased to announce that we recently launched Financials Sector Pro, Josh's new research product. Click HERE to learn more.
HEDGEYE FINANCIALS WEEKLY LABOR MARKET READING
Initial unemployment insurance claims (SA), filed in the week ending July 18th, were 1.41 million, up +8.4% w/w. Cumulative initial claims have now hit 53 million, although this includes a fair amount of duplicate filings and over-counting on both the state and PUA levels.
Pandemic Unemployment Assistance (PUA) claims filed in the week ending July 18th were 975K, up +2.1% w/w. Recall, PUAs are part of the CARES Act and cover workers ineligible for traditional state UI assistance, including independent contractors, self-employed individuals, and others as detailed in the CARES Act.
In the past, we had taken the PUA figure boxed in purple in the summary table above to represent the number of continuing PUA claims; however, what we have since learned is that this number does not represent the number of claimants, but rather the number of claimant weeks.
For instance, if a person filed in July for PUA assistance and was eligible retroactively to have begun receiving PUA benefits beginning in March under the CARES Act, the PUA Continuing number would reflect all the weeks from March through July that that person was eligible to collect rather than just the current week.
Given the unprecedented speed with which initial claims have manifested, our view remains that the best way to contextualize the magnitude of the labor market crisis is to look at continued claims.
Continued unemployment insurance claims (SA), the total number of people claiming benefits in all programs for the week ending July 11th, 2020, were 16.2 million, down -6.4% w/w. Continued claims of 16.2 million are currently ~2.45x the previous high-water mark of ~6.6 million set during the financial crisis.
All in all, while declining continuing state claims remains a silver lining, the pace of the recovery, given the favorable initial conditions, has been underwhelming, especially against the emerging backdrop of re-accelerating new job losses and the uncertainty surrounding expiring enhanced unemployment aid.