December 2, 2021

Initial unemployment claims for the week of November 27 rose 28 thousand to 222 thousand after having fallen 76 thousand in the previous week.  After reaching a peak of 6,867 thousand at the end of March of last year initial claims had been steadily declining.  Prior to the recession claims were 203 thousand so claims are now essentially where they were prior to the recession.  The 4-week average of claims is the lowest level for initial claims since March 14, 2020 when it was 225 thousand.  The much lower level of claims in recent weeks suggests a somewhat faster pace of job creation is underway as businesses and consumers continue to rebound from the recession.

The number of people receiving unemployment benefits fell 107 thousand to 1,956 thousand after having declined 46 thousand  in the previous week.  In fact this series has declined in 9 of the past 10 weeks.  Prior to the recession roughly 1,725 thousand people were receiving benefits.  It is still a bit high, but it is declining steadily.

Given the decline  in the number of people receiving unemployment benefits  the insured unemployment rate fell 0.1% in most recent week to 1.4% after declining 0.1% in the previous week.  Before the shutdown started it was steady at 1.2% so it is declining steadily and getting close.  This series reached a peak of 17.1% in the week of May 9, 2020.  It continues to decline by about 0.1% every week or two.  It could be that some lower income workers are weighing their options and perhaps deciding to permanently leave their industry.  That is an easy decision to make as long as somebody is paying you not to work. But given that generous Federal unemployment benefits expired after Labor Day those people seem much more willing to take a job as the year progresses..

The insured unemployment rate tracks closely  the unemployment rate.   Given the level of  the insured unemployment rate we expect the unemployment rate to decline 0.2% in November to 4.4%.  We also expect payroll employment to increase by 700 thousand workers in November.  We will get that report on December 3.

The fiscal stimulus money is boosting consumer spending and with the savings rate at 7.5% the consumer still has  ammo to spend on whatever he or she wants for months to come.  The number of COVID cases has declined sharply.  And initial unemployment claims and benefits continue to drop which suggests we will see a substantial increase in employment in November and probably beyond.  As a result, we  expect to see 8.0% GDP growth in the fourth quarter, and 4.9% GDP growth in 2022.

Stephen Slifer


Charleston, SC