Topline
The number of new unemployment claims unexpectedly jumped for the third week in a row this month—adding to evidence suggesting the record wave of coronavirus cases this month—spurred by the rapidly spreading omicron variant—has stunted the economic recovery.
Medical personnel secure a sample from a person at a drive-thru Covid-19 testing station in San … [+]
Key Facts
About 286,000 people filed initial jobless claims in the week ending January 15, an increase of 55,000 from the previous week, according to the weekly data released Thursday.
Economists were only expecting about 225,000 new claims last week, according to Bloomberg data.
The new report also showed the number of Americans receiving unemployment benefits jumped above 1.6 million in the week ending January 8 after a marked decline in the previous week—before the omicron variant of the coronavirus fueled a record spike in Covid-19 cases.
The concerning data comes after an unexpected spike last week that Bankrate senior economic analyst Mark Hamrick says “may well have been the first report suggesting omicron is leading to new job loss.”
In a morning email, Hamrick said the pop in new claims suggests the omicron variant has “tainted recent economic activity” and added that the the job market recovery has been further stifled by supply chain disruptions and high inflation.
Crucial Quote
“The future path of the pandemic remains highly uncertain, but the underlying job market narrative overall continues be one of scarcity of available applicants and workers,” Hamrick said last week. “The latest wrinkle, the high level of individuals testing positive, becoming ill or staying away from work, has added to supply chain disruptions with inflation already running red-hot.”
Key Background
The new unemployment data comes after a disappointing labor report this month showed the U.S. added a lower-than-expected 199,000 jobs in December. After the report, Hamrick said it was still “difficult to measure” the economic impact of the omicron variant at that point and cautioned against dismissing its potential, pointing out widespread worker shortages, stoked in part by lingering concerns over the pandemic, remain a big uncertainty. Economists surveyed by Bankrate said the variant could weigh on job growth in the first three months of the year, but estimated the unemployment rate will fall from 3.9% to 3.8% in a year. Moody’s Analytics’ Mark Zandi shared a similar word of caution, saying, “Risks are rising,” and forecasting that the economic recovery “is set to turn soft” as omicron stunts business. Amid the latest surge, credit card spending and restaurant bookings have already dropped substantially, while widespread flight cancellations have been another economic concern, Zandi notes.
Further Reading
Record 4.5 Million Americans Quit Jobs In November As Employers Struggle To Retain Workers (Forbes)
December’s Stunning Job Growth Doesn’t Tell The Whole Story—Omicron Sparked ‘Significant Economic Damage’ (Forbes)
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Source: https://www.forbes.com/sites/jonathanponciano/2022/01/20/new-jobless-claims-keep-unexpectedly-spiking-as-omicron-surge-taints-economic-recovery/