Weekly Unemployment Claims Recede Slightly, But Total Claims Are Still Devastating
The number of Americans filing for unemployment insurance in the week ending April 18 slowed somewhat for the third straight week, as the coronavirus pandemic continued hobbling the U.S. economy. But the total jobless rate is still approaching levels not seen since 1933, when the rate hit 24.9% during the height of the Great Depression.
Initial Claims Decelerate for the Week, Yet Remain Very High
With the current volume of claims and adjustments from the prior week, the U.S. unemployment rate is now estimated to be 21.7%.
The Department of Labor reported that for the week ending April 18, initial unemployment claims receded for the third straight week, but still saw an additional 4.427 million claims filed. The seasonally adjusted initial claims for the week ending April 11 were revised down to 5.237 million. Coupled with early claims and continued claims*, the estimated number of unemployed people in the U.S. now is 35.2 million.
* Using ThinkWhy estimates, because continuing claims from the DOL currently contain discrepancies.
By state, some of the largest non-seasonally adjusted increases in initial claims from March 15 through the week ending April 18 were:
Some States Ready to Open, Others To Stay the Course
Several states in the past week have prepared to reopen their local economies while others have extended stay-at-home orders, all of which will undoubtedly impact local unemployment. New York and other East Coast states are extending stay-at-home orders and requiring nonessential businesses to remain closed until May 15 in hopes of avoiding a resurgence of COVID-19 cases.
Georgia plans to open gyms, bowling alleys, barbershops, hairdressing salons and the like beginning Friday, April 24 with what are being called Minimum Basic Operations. The governor of Georgia defines Minimum Basic Operations as "screening workers for fever and respiratory illness, enhancing workplace sanitation, wearing masks and gloves if appropriate, separating workspaces by six feet, teleworking if possible and implementing staggered shifts.” While Georgia is just one example, most states are strategizing on the phases they will take to slowly open area businesses in the safest fashion in order to get as many people back to work as possible.
Unemployment Funds Running Low
Since February, half the U.S. states have logged a greater than 10% decline in their trust fund balances that are used to fund unemployment payments. While the extra $600 added to weekly unemployment disbursements is paid through the federal stimulus package, regular unemployment payments are made with these state funds.
For scale, California paid out $975 million in unemployment between March 15 and April 11, accounting for 39.06% of its available funds. Massachusetts and New York have exhausted 54.21% and 48.86% of their trust funds, respectively.
Other states that have lost more than 25% of their fund balances include Texas (26.93%), Kentucky (27.67%), West Virginia (29.02%), Connecticut (30.87%), Ohio (31.58%) and Illinois (33.14%). Most states are planning to borrow from the federal government to help cover the cost of unemployment benefits through no-interest loans.
As unemployment criteria change, look for initial claims to start coming in from gig, contract and freelance workers. Expect deceleration toward 3.0 million initial weekly claims for the remaining weeks of April, totaling 19.0 million for the month. That would put the U.S. unemployment rate at 23.2 percent. Although initial weekly claims grab much of the spotlight, it is also important to keep an eye on the number of continued claims, because they serve as an indicator of people moving back into the workforce.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs and businesses across the country. Stay current with us. We are here to support organizations and provide insights during the economic downturn, as well as the recovery phase.