“The rate of gross job losses, presumably concentrated in the consumer services sector, remains depressingly rapid,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
In a healthy economy, when the unemployment rate is below 4%, jobless claims are typically a third of where they currently stand, according to PNC Senior Economist Bill Adams. Between 2017 and 2019, weekly unemployment claims averaged around 230,000. Roughly 9.5 million fewer workers are on payrolls in the United States today than there were before the pandemic
“There is still a ways to go until the labor market regains all the jobs lost over the past year,” Adams noted.
Last week’s number is actually worse than it appears: Nearly 242,000 people filed for special pandemic unemployment last week, because they were otherwise ineligible to receive standard unemployment insurance.
Each week, Shepherdson said, some companies are either downsizing or throwing in the towel, unable to hang on until the economy reopens. That’s why 4.1 million workers remain on unemployment in the United States on a seasonally adjusted basis.
But the two top regulators tasked with fixing America’s broken economy acknowledged that particularly hard-hit sectors, including travel, leisure, restaurants and hospitality, will remain in dire straits until the pandemic ends.
That’s where economists are hopeful: America’s vaccine rollout is continuing strong, and President Joe Biden said everyone who wants a vaccine should be able to book an appointment by the end of May. So economists believe job growth will start to quickly accelerate as people get their shots and the stimulus starts to take hold.
“Falling coronavirus cases are especially good news for high-contact industries like restaurants, hotels, and other leisure and hospitality businesses,” Adams noted. “As the pandemic comes under control, these businesses will rapidly regain revenue and rehire workers.”
Although jobless claims have been stubbornly stuck in neutral, sliding lower over the past several months, there’s hope on the horizon.
“This gradual attrition should not last much longer,” Sheperdson said. “We expect claims to fall sharply as the economy reopens fully across the second quarter.”