2.98 million Americans filed for unemployment benefits last week, the latest sign that the impact of lockdown measures imposed to stop the spread of COVID-19 is still being felt in the labor market, where the unemployment rate is now the highest since the Depression.
The latest jobless claims figures were considerably worse than expected. Economists were looking for “just” 2.5 million on the headline. The previous week’s total was revised up to 3.17 million. Continuing claims perhaps offers some hope, but let’s face it: At 22.8 million, the notion that anyone should point to the figure as a sign of “stabilization” is wholly laughable.
For the week ended May 9, the four-week moving average is 3.6 million, down from 4.17 million.
The latest claims data comes on the heels of the worst monthly jobs report in US history, and amid dire warnings about structural damage to the US economy.
A long list of Fed officials this week cautioned that without sufficient fiscal support, a wave of bankruptcies may be in the offing. Jerome Powell drove the point home with an overtly foreboding assessment delivered during a webinar on Wednesday.
Goldman earlier this week revised their projection for peak unemployment higher, to 25% from 15%, and they’re hardly alone in downgrading their near-term assessment of the economy. “The recovery in the unemployment rate will be later and slower”, Credit Suisse said Wednesday. “We now expect unemployment to continue rising into May and then to fall sharply into the 7-8% area by Q4 as workers return but labor demand is reduced by damaged businesses”. Goldman sees the jobless rate sticking close to 10% by year-end, and Donald Trump himself admitted that it likely won’t be below 10% by September.
All of that is just everyone marking their projections to market, really. Thursday’s claims data underscores as much.
The eight-week total for initial claims is now nearly 36.5 million.
The updated visual below shows how jobless claims in and around the virus recession compare to the old record set nearly four decades ago.
I say it every week because it needs to be said: Even as these figures recede, they are still multiples of the previous record. This is a disaster of historic proportions, and it is far from over.
The hope is that between the Paycheck Protection Program and reopenings across states, employers rehire and stop laying people off. But that depends in no small part on whether and to what extent consumers feel safe.
Fingers crossed that all those describing their predicament as “temporary” are correct in their assessment.
If “temporary precarity” turns into structurally higher unemployment, we’re in for a long, dark haul.
Many states are trying to reignite their economies, but so far it’s been slow going.
Last week — Florida, California, Georgia, Texas and New York reported the most new jobless claims, according to the Labor Department.
Lots of states are still underreporting new claims because of antiquated computer systems and small staffs that have been unable to handle the crush of applications. It may be some weeks before they are all caught up.
As of May 2, almost two-thirds of all the people who filed new claims were receiving benefits. Continuing claims are reported with a one-week lag, but the number is almost certainly higher. The true number of people who are out of work is still not known.
Against the backdrop of “fear of reopening” do you judge it increasing those fears or allaying them in the sense that it is going better than expected?