This is not the right direction. While we’ve gone months with initial jobless claims below one million people, we need the number much closer to the long-run average of 200,000.
Last week the number of Initial claims for state unemployment benefits unexpectedly rose to 861,000 for the week ended Feb. 13, compared to 848,000 in the prior week. Not only did claims go the wrong direction, but they were well above the consensus estimate of 765,000.
Part of the increase in claims could be related to the temporary closure of automobile plants beginning last week due to a global semiconductor chip shortage. General Motors announced it would take down production entirely at its Fairfax plant in Kansas City during the week of Feb. 8.
Ford Motor has reduced shifts at its Dearborn truck plant and Kansas City assembly plant.
Claims have dropped from a record 6.867 million last March when the pandemic hit the United States. Though they are stuck above their pre-COVID peak of 665,000 during the 2007-09 Great Recession, and several times higher than the normal range of 200,000 to 250,000.
The problem isn’t consumer spending, which marched higher last month, so more money in consumers’ pockets won’t change anything. We need to reopen more of the economy as quickly as possible so that the unemployed have somewhere to work.