Long Road Still Ahead Despite UI, GDP Improvements

by Daniel Zhao

Initial unemployment insurance (UI) claims dropped last week, finally approaching peak Great Recession levels now 33 weeks into the COVID-19 crisis. While claims have made significant progress since the worst of the crisis, they remain historically elevated at more than 3 times the pre-crisis level. This suggests layoffs continue to ripple through the economy.

The Q3 GDP report released today also tells a similar story of an economy on the path to recovery, but with a long road ahead. GDP rebounded sharply in Q3, but still leaving the economy 3.5 percent short of pre-crisis levels in real terms. Against the backdrop of an uncertain recovery, Congressional negotiations over additional relief have stalled as savings dry up and unemployment benefits are exhausted or scheduled to expire.

With Election Day less than a week away, the data sets the stage for the economic challenges over the next four years. The labor market continues to bear the scars of the acute COVID-19 crisis, and while the economy is making progress, the trajectory of the recovery is by no means certain.

Today's UI Claims Report

Initial UI claims fell by 28,354 to 732,223 from 760,577, on a non-seasonally adjusted basis, according to the latest figures from the Department of Labor for the week ending October 24. On a seasonally-adjusted basis, 751,000 initial UI claims were filed, decreasing from 791,000 in the prior week.

Pandemic Unemployment Assistance (PUA) claims rose to 359,667, the second consecutive week of modest increases. This wasn't enough to overcome the decline in traditional UI claims, however, bringing UI and PUA claims combined to their lowest level since March, though it still marks the 32nd week with over 1 million new weekly claims.

Non-seasonally adjusted continuing claims for UI fell to 7.4 million for the week ending October 17, continuing a rapid decline starting from mid-September. However, most of the decline is because traditional UI benefits are being exhausted for many unemployed, highlighting the millions of unemployed Americans for whom government relief is running dry.

To speak with Daniel Zhao about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.