The Employment Situation
Full Steam Ahead on the Road to Recovery
- The Bureau of Labor Statistics announced that in August, the economy created 1.4 million jobs. The last four months recovered nearly half of all jobs lost from the pandemic. Continued gains may be due in part to the expiration of the generous $600 weekly unemployment benefits which disincentivized workers to return to their jobs in the first place.
- The unemployment rate sunk to 8.4% while labor force participation slightly grew. According to Council of Economic Advisors Acting Chairman Tyler Goodspeed, the decrease in the unemployment rate while an increase in the labor force participation rate is due to “more people actively looking for work.”
- The economy recovered nearly 12 million, or two-thirds, of workers who were temporarily laid off while permanent job losses increased by only 2.1 million since February.
(About the Employment Situation: The Employment Situation tracks how many jobs were created/lost, the unemployment rate, and wages. This report gives the clearest monthly snapshot of how healthy the economy is doing.)
Initial UI Claims Down, Continuing Claims Remain Steady
- State initial claims continue its fall while PUA climbs upward for its third straight week.
- Total continuing claims for the week ending on August 15 climbed up – the first increase since the week ending on July 18. However, if the continuing claims trend follows the initial claims trend, then total continuing claims may revert back to its overall downward trend.
- The Department of Labor changed its methodology for seasonal adjustment of unemployment insurance state initial claims. Comparisons between future state initial claims numbers to previous initial claims numbers during the pandemic may not be appropriate until the Department of Labor applies its new method consistently across pre-existing data since the beginning of the pandemic.
(About unemployment insurance: Initial claims are new claims by jobless workers who are looking to receive unemployment benefits. Continuing claims are those who continue to receive unemployment benefits because they have not found a job yet. Continuing claims does not count all jobless workers – just jobless workers who are receiving unemployment benefits. There may be jobless workers who do not apply for, are ineligible for, or exhausted all of their unemployment benefits which would not be counted.
Note on PUA: PUA provides for retroactivity to January 27, 2020. State challenges implementing PUA led to significant claims backlogs and backdated claims are included in the continuing claims number. For example, if a jobless worker applied and was determined eligible for eight weeks of PUA benefits, but the state processed those claims on week eight, then a total of 8 claims are counted in week eight for the jobless worker instead of one claim each week. In addition, if an individual was potentially eligible for weeks of PUA benefits during the period the state did not have the program operational, the individual could file for multiple weeks of PUA in the same week. As a result, PUA continuing claims are likely an overcount and exceed the number of individuals actually receiving PUA.)
When: Wednesday September 9, 2020:
What to Expect: The report should show that our economy continues to recover, meaning it is likely that additional job openings remain. The Federal Reserve’s Beige Book noted that businesses across the nation are struggling to find workers to fill job vacancies – with some schools remaining closed, many parents are left to watch over their children.
(About the JOLTS Report: The JOLTS Report provides a snapshot of labor demand. It reports the amount of job openings, hires, and voluntary/involuntary separations.)
NFIB Small Business Optimism Index
When: Tuesday, September 8, 2020:
What to Expect: As fiscal stimulus wears off and no additional stimulus in sight due to Democrats’ grandstanding in Congress while consumer demand has yet to reach pre-pandemic levels, it is possible that small businesses’ outlook on the economy is filled with uncertainty.
(About the NFIB Small Business Optimism Index: The NFIB Small Business Optimism Index provides an insight into small businesses’ sentiment and economic outlook on labor markets, capital spending, sales, etc.)
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