Back to top

Image: Bigstock

Initial Jobless Claims Rise to 719K

Read MoreHide Full Article

Initial Jobless Claims went back up last week, crossing the 700K mark many thought we’d left behind and up from the 675K analysts were expecting. It’s also up 62K from the previous week’s 657K, though this figure was drastically reduced on this week’s revision, from the 684K originally reported. Thus, it makes this week-over-week spike pointier, but averaged out more or less as expected.

Continuing Claims were again lower than the previous week — 3.79 million versus the downwardly revised 3.84 million — and a steady (if plateauing) reduction week over week since the start of 2021. One key note which makes both Initial and Continuing Claims look better: Pandemic Unemployment Assistance (PUA), which had been absorbing more and more unemployed citizens every week, fell 400K in this latest read. This is a good development for the labor force overall.

Tomorrow’s nonfarm payroll report from the U.S. Bureau of Labor Statistics (BLS) will be the final shoe dropping on the employment situation for the week, which will then have ramifications for economic projections going forward. Several analysts are calling for February’s very good 379K new jobs created to have roughly doubled in March, as reopenings continue and Covid vaccinations meet head-on with a year’s worth of pent-up demand.

Yesterday’s private-sector payrolls from ADP ((ADP - Free Report) reached 517K — also a very good number, and roughly triple the February tally — on strength in Leisure/Hospitality and Trade/Transportation, particularly, but were a tad shy of consensus. Thus, even with Friday’s jobs figures already exciting bullish investors looking for another leg up in the market, some analysts are calling for a million new jobs having been created last month… and this may set them up for disappointment. Then again, maybe they’re right. We shall see.

President Biden on Wednesday afternoon announced his bold new infrastructure/economic recovery plan, for an estimated $2.0-2.3 trillion over the next eight years. In it, $621 billion is to go toward rebuilding bridges, roads, train lines, airports and electric vehicles. Improvements and updates to the water system is expected to cost $300 billion. Manufacturing research & development, including massive retraining, is looking at a $580 billion price tag.

To help pay for this largest spending bill since the Interstate Highway System 65 years ago will be an increase in the corporate tax rate to 28% — half-way between the slashing of corporate tax rates during the Trump administration from 35% to 21% at the end of 2017. There are reportedly also measures in this new bill that will prevent the offshoring of funds which keep large holdings away from Uncle Sam.

Right away, we are hearing resistance to the passage of this bill from top opposition leaders on Capitol Hill, specifically discussing the corporate tax hike, as well as those on the left of the president in his own party, from those who don’t feel this package goes far enough. This will likely be the only time in the foreseeable future that borrowing costs will be this low, especially with an economic explosion imminent. And besides, when you manage to upset both sides equally, you probably have yourselves a deal.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Automatic Data Processing, Inc. (ADP) - free report >>