According to ECB, inflation will rise next year, jobless claims still in stagnation
The global economy is currently struggling with coronavirus impacts and is trying to recover from one of the harshest recessions ever to hit. Central banks marched into the battle with the arsenal of regulations some of them had never been heard of before. Goal number one is to keep employment rates or at least get people back to work as soon as possible. Because it’s their consumption what the economy needs for its expansion. Today’s jobless rate numbers suggest rather the opposite - employment stagnation. Meanwhile, the ECB restated the need for massive monetary stimuli. The fight is far from over.
Another week of stagnation for the US job market
Applications for unemployment benefits in the US only stagnated last week, indicating that large job losses persist. New applications grew by 884,000 last week, the same as last week. Ongoing applications for support grew by another 93,000 to 13.4 million. Unexpectedly high numbers of applications underline the uneven recovery of the US labor market. Many companies have re-launched hiring processes, but millions of people are still out of work.
At the same time, aid to small businesses is drying up in the US and some companies are announcing employee cuts. Even improvements in new applications in the coming weeks may not fully reflect the market situation, as the US Congress has still not agreed on the form of another fiscal package that would include unemployment benefits. Millions of Americans are on their way to long-term unemployment, which can exceed 27 weeks. Most states offer unemployment benefits for a maximum of 26 weeks, which is a duration that will be already reached this month by people who were laid off at the beginning of the pandemic.
Figure1: Jobless claims rates in the US (Source: tradingeconomics.com)