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Weekly Initial Claims for Unemployment Benefits Fell but Outlook Remains Uncertain – Robert Hughes

Initial claims for regular state unemployment insurance totaled 348,000 for the week ending August 14, a drop of 29,000 from the previous week’s revised tally of 377,000 (see first chart). This is the fourth decline in a row and the lowest level of the pandemic.

The four-week average fell 19,000 to 377,750, also the lowest of the pandemic. A record number of openings continue to be reported across many industries, yet labor force participation remains low, making it difficult to fill the positions. Churn across the labor market remains high as employees quit in record numbers, looking to move to better paying and/or better quality jobs.

However, the resurgence of Covid cases due to the Delta variant represents a growing threat to the outlook for economic activity and the labor market. Furthermore, the combination of labor shortages and resurging numbers of Covid cases may exacerbate materials shortages as well as logistical problems, sustaining upward pressure on prices in the short term.

The number of ongoing claims for state unemployment programs totaled 2.837 million for the week ending July 31, a drop of 78,737 from the prior week. The latest reading is the 19th consecutive week below 4 million and the second below 3 million since the start of the pandemic (see second chart).

Continuing claims in all federal programs totaled 8.907 million for the week ending July 31, a decrease of 233,050. The latest result is the 12th consecutive week that Federal continuing claims have been below the 12 to 16 million range (see second chart).

The latest results for the two programs put the total number of people claiming benefits in all unemployment programs, including all emergency programs, at 11.744 million for the week ended July 31, a drop of 311,787 from the prior week and the 14th consecutive week below 16 million (see second chart).

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