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
Recall, the data from three weeks ago included a change in methodology. As such, the data from three weeks ago represented the first week reflecting the methodological adjustment, with prior weeks not being revised, new and old seasonally adjusted data will not be comparable.
Initial unemployment insurance claims (SA), filed in the week ending September 19th were 870K, up +0.46% w/w.
Cumulative initial claims have now hit 62 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 September 19th were 630K, down -6.7% 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.
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 12th, 2020, were 12.58 million, down -7% w/w. Continued claims of 12.58 million are currently ~1.91x the previous high-water mark of ~6.6 million set during the financial crisis.
Now 27 weeks removed from the onset of pandemic-related jobless claims, and with unemployment benefits typically lasting 26 weeks, we expect to see continuing claims roll off in the coming weeks, with the exact timing and magnitude difficult to forecast given the delay in claims processing among other complications.
As Hedgeye Macro Analyst Christian Drake noted, the forthcoming eligibility roll is likely to correspond with the growing roll-off in FEMA sourced, enhanced U.I. benefits amid weak prospects for a congressional extension given the hostility in Washington ahead of the November election.
In sum, we continue to see confirmation of 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.