Not a lot to distill here, really.
The modest sequential decline in Initial Claims and Total Claimants is ostensibly encouraging but the peri-holiday period is invariably noisy and Trump’s delay in signing the latest stimulus package added an additional layer of uncertainty. The Labor department indicated it didn’t expect eligibility to lapse, but given the legislative delay, another round of retooling of antiquated state systems to accommodate the eligibility changes and weather/holiday related impacts, who really knows.
Disentangling whether the “improvement” observed across a single week in isolation was due to actual underlying improvement, knock-on effects of stimulus dithering (some people temporarily rolling off) or simply statistical noise associated with the holiday is mostly quixotic.
In any case, it doesn’t really matter.
The simple fact that benefits were, in fact, both enhanced and extended remains the fulcrum factor vis-a-vis the near-term outlook for the consumption economy.
Recall, the average regular state UI benefit nationally is ~$350/wk. The $300/wk enhanced benefit takes that up almost 100%. And for the millions who had already hit or were set to hit the 39-week mark (the latest package extends that a further 11 weeks) and plunge over the benefit expiration cliff, the outlook has pivoted from one of acute income insecurity to almost 2X the income they had been receiving since the prior round of enhanced benefits lapsed in late Aug/early Sept.
Coupled with the new round of stimulus checks, total income sourced from social transfers should set-up a consumption dynamic similar to that observed over the April-August recovery period. It should also serve to re-pad the build in excess savings which continues to sit as a latent consumption amplifier available to be deployed alongside the macro/services economy renormalization.
In other words, #Quad2
