Weekly Jobless Claims Soar. Is Omicron Setting Back Our Economic Recovery?
Unemployment claims jumped last week. Should we be worried about an economic setback?
- New jobless claims came to 286,000 for the week ending Jan. 15.
- Economists were only anticipating 225,000 new claims.
In December, the national unemployment rate reached its lowest level since the start of the pandemic. That was despite a massive surge in COVID-19 cases that began in the middle of the month.
But the omicron surge hasn't eased up. If anything, cases exploded even more in the wake of holiday gatherings and New Year's plans. And that could explain why last week's jobless claims were higher than they've been in months.
For the week ending Jan. 15, new unemployment claims totaled 286,000. That's well above the 225,000 new claims economists were anticipating. It's also the highest level of weekly claims to be recorded since October.
For context, for the week ending Jan. 8, newly filed jobless claims amounted to 231,000. So 286,000 is clearly a big jump from there. And not only did newly filed claims increase, but so did continuing claims. That number rose by 84,000 to 1.64 million.
Is omicron to blame?
Many companies are still desperate to hire, and industries like retail and hospitality are still experiencing their share of labor shortages. As such, it's fair to assume the omicron outbreak has contributed to this recent uptick in jobless claims. With case numbers rising and more and more workers needing to isolate due to COVID-19 exposure, that alone could explain why unemployment claims are up.
Though workers who are sick with COVID-19 generally can't qualify for unemployment benefits, those who are forced to quarantine due to exposure may be eligible for aid. That's because workers in this boat are, technically speaking, able and available to work -- a criteria that generally needs to be met to collect those benefits (whereas workers who are ill are not considered available for work due to being sick).
As such, last week's jump in new jobless claims may just be temporary, and we could see a much lower number the week ending Jan. 22. Or, we may see a few weeks with higher jobless totals as the current COVID-19 wave rips through the country.
Will higher jobless claims mean more stimulus aid?
The last round of stimulus checks to hit Americans' bank accounts was approved in March 2021. Back then, jobless numbers were much higher and there were fewer open jobs to be had. COVID-19 vaccines also weren't widely available, making it harder for people to get back into the labor force. And many schools were still operating in virtual mode, either partially or fully, making it harder for parents to accept full-time work.
But despite this sudden uptick in new jobless claims, it's unlikely that Americans will see a fourth round of stimulus checks anytime soon. While an increase in claims isn't a good thing, even if that uptick continues for a few weeks, the economy is still in far better shape than it was in March 2021, when it was easier to make the case for a stimulus round.
Health experts have been optimistic the latest COVID-19 wave will be relatively short-lived. If they're proven correct, we could see a temporary increase in unemployment filings before those numbers start to come back down to pandemic-era lows.
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