Understanding the EUC's Impact on Job Data

Excerpt from Raymond James Economist Dr. Scott Brown's latest economic commentary:

Claims for state unemployment insurance benefits have become more elevated in recent weeks.  Part of this rise is due to the implementation of the government’s Emergency Unemployment Compensation [EUC] program.  No surprise, the extension of unemployment insurance benefits has lifted both the number of initial claims and the unemployment rate.  That has happened every time benefits have been extended.  However, it’s unclear how much of the recent increase is due to the EUC and how much is due to actual job destruction.  The Labor Department cannot isolate the impact.

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The Household Survey provides some detail on where the unemployed are coming from.  The biggest increase has come in non-temporary job losses.  These are structural changes.  Those on temporary layoffs has also increased.  Two other sources are new entrants and re-entrants (boosted by the EUC).  The unemployment rates for teenagers and young adults are up a lot from a year ago.  Tough economic times have led many stay-at-home spouses and retirees to return to the workforce.