The number of Americans losing their jobs each week has fallen to the lowest level since the coronavirus pandemic began a year ago, but it’s no time to start popping champagne corks.
New applications for unemployment benefits slipped below 1 million in late March. These benefits are paid out through long-running state programs and a temporary federal fund created during the pandemic.
New jobless claims filed through long-running state programs and a temporary federal relief fund slid to an unadjusted 898,534 in the week ended March 20. Early in the pandemic, new claims climbed to as high as 6.2 million in one week alone.
Good news, to be sure, but the economy still has a long way to go.
Before the coronavirus pandemic struck, new jobless claims never surpassed 695,000 in any one week. And some 10 million jobs that existed before the pandemic are still missing.
“The overall trend is down, but the level remains extremely high by pre-pandemic standards,” said chief economist Scott Brown of Raymond James.
The jobless claims numbers are also suspect, Wall Street
economists say. They’ve sometimes moved sharply up or down from one week to the next for seemingly unfathomable reasons.
Two weeks ago, for instance, new claims shot up to a one-month high of 781,000. Then they tumbled last week to a pandemic low of 684,000.
“Just like last week, when we were suspicious of the big increase, we are somewhat suspicious of the decline this week,” said Thomas Simons, money market economist at Jefferies LLC.
Take Illinois. New claims rose from 57,483 in early March to 71,125 a week later before sinking back down to 14,828. A similarly large gyration has occurred in Ohio, with smaller swings in a handful of other states.
A big part of the problem: Antiquated state computer systems for handling claims, a problem exacerbated by the record crush of applications.
Massive fraud is another complication. The federal program in particular has been flooded with improper claims in no small part because it made self-employed workers eligible for the very first time. The government cannot cross-check those claims vs. employer records to assess their validity.
The federal government has also let emergency benefits lapse a few times, forcing states to stop and then re-start temporary unemployment programs funded by Washington.
All that aside, the number of people filing for unemployment benefits is all but certain to fall as the economy improves.
More and more people are getting vaccinated, coronavirus cases have waned and Washington just approved a huge $1.9 trillion stimulus package to shore up the economy. Warmer weather will also help.
Best to hold off on the champagne, though, until new claims drop below 400,000 a week and the number of people receiving benefits tumbles under 10 million.
Some 18.9 million claims were reportedly being paid as of March 6, the latest data available.
While the total is likely inflation by fraud, it’s still vastly higher than pre-pandemic levels. Fewer than 2 million people were collecting benefits in early 2021.