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Takeaway: Initial claims held flat at 884K while continuing claims ticked up w/w to 13.39M as job losses begin shifting from temporary to permanent.

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Unemployment Recovery Showing Signs of Stalling - 04.03.2020 unemployment line cartoon  4   3

HEDGEYE FINANCIALS WEEKLY LABOR MARKET READING

Recall, last week's data included a change in methodology. While last week's data represented the first week reflecting the methodological adjustment, with prior weeks not being revised, new and old seasonally adjusted data will not be comparable.

Unemployment Recovery Showing Signs of Stalling - Summary

Initial unemployment insurance claims (SA), filed in the week ending September 3rd were 884K, holding flat w/w. Cumulative initial claims have now hit 60.2 million, although this includes a fair amount of duplicate filings and over-counting on both the state and PUA levels.

Unemployment Recovery Showing Signs of Stalling - Initial

Pandemic Unemployment Assistance (PUA) claims filed in the week ending September 3rd were 839K, up +12% 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.

Unemployment Recovery Showing Signs of Stalling - PUA

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 September 3rd, 2020, were 13.39 million, up +0.70% w/w. Continued claims of 13.39 million are currently ~2.0x the previous high-water mark of ~6.6 million set during the financial crisis. 

Unemployment Recovery Showing Signs of Stalling - Continuing

Takeaway:

With the recovery in initial claims stalling out, continuing claims ticking up, and total claimants rising for the second week, this week's unpleasant trifecta confirms our broader labor market narrative of temporary job losses giving rise to more permanent/structural job loss as suppressed consumer demand and expiring unemployment benefits and payroll support measures take effect.