Initial Claims rose +23K W/W to +885K, hitting the highest level in 15-weeks as PUA Claims spiked to +455K, PEUC Claims rose +268.5K and Total Claimants jumped more than 1.6M to 20.647M.
The labor market is clearly deteriorating and the prospects for an outright negative NFP print for December continue to rise as COVID and his newly seeded amplification agent (winter) metastasize through the domestic labor market.
A quick redux around eligibility timelines and a critical outstanding question …..
- PUA Benefits: which provided expanded eligibility for those who would otherwise not qualify for normal state claims – last 39 weeks
- Normal State benefits last 26 weeks
- PEUC Benefits: provide an additional 13 weeks of benefits following exhaustion of Normal state UI Benefits.
- Normal State Benefits + PEUC Benefits = 39 weeks (inline with that offered by PUA)
- Extended State Benefits: The size and duration of extended benefits offered by states varies meaningfully and is dynamically conditioned (for example, some states offer no extended benefits, some offer months of additional benefits, some offer extended benefits but only if the state unemployment rate is above some variable threshold). In the present instance, extended state benefits are generally offered after exhaustion of both normal state benefits and PEUC extended benefits.
The Fulcrum Factor At Present Is This:
- The myriad pandemic relates support programs carry a December 31st expiration date. This represents the income cliff we’ve been detailing for months.
- The combination of normal state benefits and extended PEUC benefits provide for a total of 39 weeks of UI payments. Initials Claims saw their initial spike on March 20th. That was 39 weeks ago.
- The largest bolus of job loss occurred in the first 4 weeks which saw north of 22M in Initial Claims filed. In other words, millions of individuals will (over the next few weeks) or have already exhausted the full 39 weeks of benefit eligibility.
A Critical Question …..
Does the prospective UI benefit enhancement and extension being formalized in Congress as part of the stimulus package include a provision that extends benefits beyond an additional 13 weeks (beyond 39 weeks in total) or does it simply extend the provisions of the current program?
Perhaps there are details floating around that address this specifically but I have not seen any explicit commentary around it. It is obviously a critical dynamic as millions face the income cliff associated not (necessarily) with the year-end expiration of pandemic related program benefits but with outright exhaustion of eligibility as they push beyond week 39.
In other words, it doesn't matter if the program is extended if you don't qualify for the program/benefits anyway. If the total duration of benefits is not further extended, the program will woefully under-meet its intended purpose with some scaled down but still dramatic manifestation of an income cliff for millions.
