Weekly Unemployment Claims Decline to Pandemic Low, Job Market Strength Persists

This week's jobs report is loaded with positive news.

There have been few weeks since the start of the coronavirus pandemic when weekly unemployment claims have come in at under 400,000. But the week ending July 31 was one of them.

Last week saw 385,000 new claims filed. That represents a decline of 14,000 new claims from the previous week.

But what's just as positive is the fact that continuing jobless claims dropped by 366,000 to 2.93 million. That may read like a large number, but it's actually the first time continuing claims have fallen below the 3-million mark since mid-March of 2020, right when the pandemic began to take hold.

Good news for now

This past week's jobs data is pretty positive in the context of the pandemic. But the fear is that if the Delta variant continues to contribute to a surge in COVID-19 cases, things could take a turn for the worse on the economic front.

The CDC has already been forced to reverse course on mask-wearing and is now urging even fully vaccinated people to don a mask when indoors in a public setting. And some cities are imposing mask mandates in an effort to curb the spread of COVID-19.

If things reach the point where restrictions mimicking those imposed early on in the pandemic come back into play, we could see a lot of businesses get impacted. That could, in turn, lead to an uptick in jobless claims, and it could also prevent more people who are collecting unemployment right now from getting back into the workforce.

All of this is coming at a time when boosted unemployment benefits are set to expire in about a month. While 26 states have attempted to end those benefits ahead of schedule (most succeeded, but some states were forced to reimplement that boost after being sued for pulling it), many people are still collecting an extra $300 a week. Once that boost runs out in early September, a lot of people could be left in a serious financial crunch, especially given the number of workers who were living paycheck to paycheck before the pandemic without any savings to fall back on.

Meanwhile, many Americans are wondering whether the economic situation will warrant a fourth round of stimulus checks. The last round featured checks worth up to $1,400 apiece.

While it's too soon to write off a fourth stimulus check, the reality is that right now, the economy is in much better shape than it was early on in the pandemic. And if things continue to improve or even hold steady, the chances of another stimulus check will be slim. However, if the Delta variant causes the economic situation to deteriorate, then a fourth stimulus round could end up hitting Americans' bank accounts.

Ultimately, we'll need to pay attention to how unemployment numbers evolve to determine the likelihood of more relief. But for now, let's take comfort in the fact that new jobless claims and continuing claims both dropped.