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Although there was a notable decline in jobless claims in the United States, those people who expected to receive a stimulus payment before the elections were frustrated after the lawmakers failed to make a deal on it.
The number of United States citizens who applied for jobless claims this week dropped by 40,000 to approximately 751,000, according to government data released on Thursday. This is the lowest figure recorded since March indicating the market is opening up slowly. Besides, it is the fourth consecutive decline reported by the relevant government agency.
However, there are fears of the number popping up once again as the rate of coronavirus infection rises in different places. The decline in jobless claims comes a few days to the United States presidential election that is hotly contested by Republican Donald Trump and Democratic bearer Joe Biden.
Notably, the decline in jobless claims coincided with a general positive report in third quarter results of most American companies. In addition, major stock indexes were up Thursday, whereby the Dow was trading 0.14% up, S & P 500 stock index was 0.62% up while the Nasdaq composite was 1.06% up at the time of writing.
Bigger Picture on the U.S. Jobless Claims
Majority Leader Mitch McConnell adjourned the Senate earlier this week, essentially shutting the door on a potential aid bill being passed before Tuesday’s election.
Media outlet CNBC noted in a post that the number of Americans who continue to receive unemployment benefits dropped by 709,000 to 7.75 million during the week of October 17. The number is expected to rise as coronavirus affects most industries adversely. In addition, with the tech competition between China and the United States, there are speculations China is winning the battle hence gaining more jobs in favor of the Americans.
According to an economist at Jefferies, Thomas Simons, although the number continues to drop steadily, there are fears that the rising coronavirus infection could result in the figure of jobless claims rising again.
“We had expected that the steep decline we saw in claims last week would be too big to repeat, but downside momentum in claims remains intact,” Simons added in a note.
As more unemployed American workers exhaust their state benefits with no stimulus at hand, they are turning to other federal programs that are offering extended compensation. Notably, the federal program offering extended compensation reported an uptick of 300k to 3.6 million in the week that ended on October 10.