In a pandemic, any incremental improvement is a relief. But when we take a step back, the numbers are still staggering.
On Thursday, the Ministry of Labor said that the first weekly demands for unemployment were 963,000 for the week ending August 8 – down 228,000 from last week's revised level, and perhaps most importantly, below a million mark for the first time in 20 weeks .
While the numbers are certainly better, it's just proof of how far we 've fallen. These numbers are bad, there is nothing to get around, says Edward Jones & # 39; Nela Richardson. "The economy does not create new jobs, it is only to regain those jobs that were lost."
Richardson is actually on alert: "A week does not mark a trend, so it is the first caution. The four-week moving average also went down, so it feels like some good news," she says Fortune . "However, I am concerned that the momentum in the labor market is losing steam, so that is what I want to take care of to ensure that the momentum continues and that the demands, which suggest temporary redundancies, remain temporary."
In fact, the fall is approaching quickly, and with it, there is also "the risk that the outbreak could see another financially damaging spike, as people continue more indoor activities and some school students return to personnel learning," senior economist at Bankrate.com, Hamrick said in an email commentary Thursday.
And the states that see spikes in coronavirus cases like Texas, Georgia and Florida, are also where the first demands for unemployment come down (in fact, Florida had the largest fall in the country ).
But the big concern for many is that unemployment benefits are still extremely high compared to pre-pandemic levels (see chart), even though the $ 600 improved unemployment benefit just ended in July.
"It remains quite amazing that Congress has not yet agreed on a new round of relief legislation with so many Americans who have suffered financially," Hamrick said. Even after the president's controversial and narrowly focused executive order, the nation's governors and business interests have called on all sides to redouble their efforts to provide meaningful and much-needed legislation. This focus should not ease due to little improvement in the still extremely high new unemployment claims.
While unemployment has been declining in recent months, it is still at a very high 1
Plus those like Richardson are not only worried about the timing of when new stimulus may go, "but also how long" the stimulus will last – She thinks we may need improved unemployment benefits through January.
Meanwhile, investing in new stimulus plans may mean more volatility going forward for investors, given "Much of the market research is based on the assumption of continued stimulus. If there is a gap in that argument for markets, you may see a setback or more volatility, "notes Richardson.
But as Richardson points out: "One issue with these numbers may be that there is less urgency in Congress if the numbers go down to make a deal faster."
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