How job losses are becoming permanent due to COVID

Yahoo Finance’s Brian Cheung joins the Yahoo Finance Live panel to discuss the latest jobs numbers and why job losses are becoming more permanent due to the virus.

Video Transcript

ZACK GUZMAN: Welcome in to Yahoo Finance Live. I'm Zack Guzman alongside Akiko Fujita, as right now we are seeing the NASDAQ sit about break-even, the Dow the biggest loser on the day, off more than a half of 1%. Of course, this all comes as coronavirus cases here in the US continue to rise, hitting record daily case counts here as we see the situation deteriorating in a lot of states across the country.

Yesterday on the show, we highlighted a new doctor on President-elect Biden's task force was highlighting the possibility of seeing another four to six-week lockdown to get the situation under control. We also got the update on the unemployment front, as initial jobless claims held steady at above 700,000 on a week to week basis. That was a little bit better than what was expected, and down from the number we saw last week. But there's still a lot of concerns that job seekers are getting permanently locked out as we move into a much tougher stage of this recovery. I want to start our second half of the show here on that topic. Yahoo Finance's Brian Cheung joins us now for more on that. Brian.

BRIAN CHEUNG: Hi, Zack. Well, the adjusted number coming in for jobless claims this morning from the Department of Labor was 709,000 Americans filing for new unemployment claims. But the way that the data is reported is a little wonky. In fact, it might be more intellectually honest to be looking at the unadjusted numbers for the week ended November 7. That came in at 723,105.

And you also want to add in what they have as pandemic unemployment assistance. This is for people that can't apply for traditional unemployment-- people like gig or contract workers. That was another 298,000. So if you were to combine those two unadjusted numbers together, the real figure of people in America filing for unemployment claims in that week was really closer to $1 million. Now, relative to where we've seen that in the past few weeks, it has ticked down-- still a tick down, not by much, but about 1.1 million that we had seen on an average basis over the last three weeks or so.

But as you mentioned, the real question here is going to be, if you're looking aside from these new people filing for unemployment, how many people are returning to continuing claims. And the figure on that was about 6.8 million for the week. Now, of course, having that many Americans turning to these continuing claims week after week shows that this recovery is, indeed, not bringing everyone back into the labor force-- something definitely worth watching as we do continue to see these COVID cases rise, which probably won't spell anything good for these types of numbers in the months going forward.

ZACK GUZMAN: Brian, we also got a new op-ed out from one of our favorite guests here in Jason Furman, a former chair of President Obama's Council of Economic Advisors, highlighting how that could weigh on Q4 growth here. He says it could subtract about 3 percentage points from the annual growth rate once we get that official number here. I mean, in terms of how large that overhang could impact growth, talk to me about how it could all slow things down when we get to Q4.

BRIAN CHEUNG: Well, definitely Q4 is a figure that we've really got to start thinking about, even though it's only just recently that we got the Q3 figures. Obviously, that 33.1% annualized number that blew the doors open for the third quarter. Now, the fourth quarter figures won't be coming out for another few months. But as we look forward to that number, that's really going to be the true tell pace of where this recovery is going. Everyone had expected that Q3 number to be the biggest on record, which it was. That's because of the depth of the decline that we saw in the second quarter.

So the likes of Jason Furman definitely pointing out pretty acutely that the number for quarter four will really show us to what degree the pace of recovery is actually happening. The numbers that I've seen have really been a moving goalpost over time, because as we know, the amount of COVID cases going up is probably going to force people to revise down that number. So could be in the single-digits, but to what degree we see that will become clear in the next few weeks or so.

AKIKO FUJITA: And also, Brian, we are hearing from Fed Chair Jay Powell speaking about what we heard earlier this week on the coronavirus vaccine, saying, you know, look, this is certainly welcome news about the 90% efficacy. But the next few months are definitely going to be much more challenging.

BRIAN CHEUNG: Yes, well, Akiko, he was speaking to Fed Chairman Jay Powell for the first time since the FOMC's announcement last week that it was holding rates steady at near zero. Chairman Powell at a European Central Bank event speaking alongside the heads of the European Central Bank in addition to the Bank of England, he said, the economic rebound was quote, "faster and stronger than expected." That would be a good sign. However, he did say that the main risk is further spread of the virus in the United States. And that's exactly what's happening right now with the record amount of new cases that we saw as of yesterday.

Powell saying that, quote, "with the virus now spreading, the next few months could be challenging." And that's in despite of the breakthrough that we saw on that Pfizer vaccine earlier this week, which shows that the Fed chairman spelling out a little bit of a cloudy outlook as we do head into the colder months of this year.