2 Trillion in Aid will Worsen US Labour Market Data

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Global markets retreated from highs on Friday morning on news from the USA. The shortterm momentum of profittaking in the markets was created by a sudden surge in jobless claims. However, the negative should be more than offset by the 1.9 trillion relief package announced earlier by Biden.

The number of initial jobless claims soared to 965K from 784K a week previous. The number of continued applications rose by 199K to 5.271 million. Such a sharp deterioration in the labour market highlighted the importance of aid packages from the government, which can prevent the collapse of peoples incomes.

Earlier, some participants had seen the forthcoming support package as a saviour for the markets, suggesting a new influx of retail investors after the cashing of cheques from the government, as was the case in the middle of last year.

Some labour market indicators now point to a tougher situation than previously estimated.

In our opinion, however, the jump in benefit claims should be seen as a consequence of the help from the government. The fall in unemployment at the end of the year was partly due to the anticipated end of the governments supplementary assistance program to the standard benefits.

The aid package from Biden intends to extend this programme until September and to increase the supplemental jobless insurance checks from 300 to 400. Last summer, it was more beneficial for some lowpaid workers to receive benefits than to work. Now, these incentives will be even…

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