Initial claims for unemployment in regular state programs fell to 787,000 for the week ended on January 2. Economists were looking for 800,000 initial claims. New claims for the prior week were revised lower to 790,000.
To keep the “improvement” in context, the worst week in the Great Recession saw new claims at 655,000.
Economists were left scratching their heads over the drop. Numbers during a holiday period are always suspect. And there’s also the possibility that all the news about the expiration of benefits at the end of the year led some people not to file.
Economists are warning that when we do get numbers without holiday distortions, they’re likely to be grim. The first data without holiday distortions comes in mid-January and economists say we could see a jump in initial claims to 850,000 or even 900,000.
Economists are also warning that the December monthly jobs report, due Friday, January 8, will show a slowdown in the labor market. Economists project the report on Friday will show the unemployment rate increased for the first time in eight months and that the economy added just 50,000 or so jobs. That would be the lowest total since the job market began to recover in May from its first big pandemic plunge.