Real quick here

The latest week's initial unemployment claims figures came out today. And they show claims have plummeted from their highest levels three weeks ago. I take this as a signal that the second wave of viral infections is not leading to a second large wave of layoffs.

The seasonally-adjusted initial claims figure came in at 1.186 million, bringing the 4-week average down to 1.337,750. But these numbers understate how quickly the figures have fallen.

Just three weeks ago, 1.5 million people filed initial unemployment claims as the second wave hit. That was the first time since the lockdown that claims had risen.

Seasonal adjustments lowered that figure to 1.3 million. By contrast, this past week there were 984,192 initial unemployment claims, with seasonal adjustments raising that figure by just over 200,000. So while the seasonally-adjusted figures only show a decline from 1.3 million to 1.2 million claims over the past three weeks, the actual unadjusted decline is over 500,000 claims.

If you had asked me three weeks ago where unadjusted initial claims would be today, because of the second wave of infections, I would have said near levels of three weeks ago or higher. Instead, they are much lower. My takeaway, then, is that the second wave impact on layoffs is now largely over.

We should expect initial jobless claims to continue to decline. It's good news for the US economy that fewer people are losing their jobs now. But, twenty weeks in, the number of weekly job losses is still higher than previous peak losses in all recessions in recorded history back to 1967. And the US still faces significant economic headwinds because of the massive number of still unemployed people.

The question now goes to what Congress will do about the fiscal cliff.