Economists warn after disappointing jobs data: ‘Unfortunately things are likely to get worse’
Another 853,000 people filed jobless claims last week, the Department of Labor reported Thursday, more than the 725,000 expected.
Claims are still four times higher than they were pre-pandemic.
Reactions from economists were not rosy.
Pantheon Macro economist Ian Shepherdson wrote that he had expected things to be worse than the consensus view that “ignored, bafflingly” seasonal reporting issues related to Thanksgiving week.
“We’re relieved the increase wasn’t even bigger,” he wrote. “Still, the jump restores the emerging upward trend, consistent with the message from the weakening Homebase [employee scheduling numbers], as consumer-facing services business struggle under increasing Covid restrictions.”
Shepherdson noted the four-week average had risen to 776,000, a five-week high, and Pantheon expects the trend to rise until the end of January or even “perhaps much longer.”
"Unfortunately, things are likely to get worse in the next couple of months,” wrote ING economist James Knightley. “We strongly suspect that Covid-19 containment measures will intensify and spread to more and more states.”
This would wreak “havoc” on the economy, he wrote, but pointed to an interesting trend.
Though various localities are implementing restrictions as deaths tick higher from the pandemic, “there is evidence to suggest that consumers are already voting with their feet.”
“The number of restaurant visits are plummeting while hotel reservations are at their lowest level since May and domestic travel is also seeing weakness,” Knightly said. “This means we run the risk of further significant job losses in the leisure and hospitality industry while the potential for closure of non-essential retail is adding to the worries about the jobs market.”
All of this is happening, Indeed’s economist AnnElizabeth Konkel pointed out, as vaccines are gearing up for mass distribution. But while that’s good news for not getting the coronavirus, it’s a very slow cure for the economy.
"It’s important to remember that a vaccine won’t immediately solve the economic damage we’re witnessing," she wrote.
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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
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