Jobless Claims Inch Up to 207,000, Suggesting Omicron Hasn’t Hurt Demand for Workers

Initial claims for unemployment insurance ticked up in the final week of 2021 but remained low enough to suggest the end-of-year surge in new coronavirus cases has not diminished employers’ desire to keep workers on payrolls.

Jobless claims rose 207,000 for the week ended January 1, an increase of 7,000 from the previous week. Economists had predicted a decline to 195,000.

New infections rose rapidly that week, hitting 585,055 on December 30. And that official case count likely understates the real level of infections because many people do not get tested if they are exhibiting only mild symptoms and positive at-home tests do not get counted.

The wave of infections has not yet shown any signs of diminishing employer demand for labor. It may, in fact, be increasing demand because so many workers are forced to quarantine away from work because of a positive test result. In other words, the likely effect of rising cases is an exacerbation of the labor shortage, constraints on the capacity of businesses to produce goods and services, and further inflationary pressures.