The number of initial claims for unemployment benefits declined in all but five states for the week ending April 18, according to filings processed at state agencies and released on Thursday. But this is only the fifth week since the economies of most states were shut down to stop the spread of the coronavirus, and the levels remain extraordinarily high.
We can expect this trend to remain in place until state agencies are able to work their way through the population of recently furloughed employees.
We can expect this trend to remain in place until state agencies are able to work their way through the population of recently furloughed employees and as the virus continues to attack essential workplaces. We suspect that the weekly initial claims count understates the true level of unemployment across the economy and it may take a few months for states to work through the backlogs.
Nationally, there were 4.4 million initial claims for the week ending April 18 on a seasonally adjusted basis, which is down from 5.2 million new claims in the previous week (and 6.2 million and 6.9 million claims reported in earlier weeks). On a cumulative basis, there have been more than 26 million initial claims for unemployment benefits since the nationwide onslaught of layoffs began during the week of March 20.
There are seven states with a million or more people applying for unemployment benefits, with Georgia and Florida now among them. That might help explain the reluctance of the governors in those states to accept social distancing and the economic shutdown as necessary for stopping the virus.
Yet reports from other states indicate that the failure to do so puts first responders – police, fire, and EMS – at risk, which should come into consideration when balancing economic losses with the needs of the communities. (Several police officers in the town of Glen Ridge, N.J., are infected with the coronavirus, and the heart of a 45-year old officer stopped at home. His heart was restarted on the way to the hospital, where he remains in intensive care with Covid-19-induced pneumonia.)
Nine states have reported more than a half-million initial jobless claims, 11 have reported more than a quarter-million, and 15 more than 100,000 newly unemployed people. All states will need resources to give financial support to those unemployed members of the labor force, and then to help them find suitable employment once the health crisis ends.
The map below shows three numbers below the state name:
- The cumulative number of initial unemployment claims since March 7, the week before the effect of shutdowns began in earnest.
- The latest increase (decrease) in the number of claims.
- The Z-score of the latest increase (decrease) in claims, which is the number of standard deviations above (below) the pre-coronavirus average.
The first number indicates the depth of the impact of the virus on the labor force.
The second number indicates the direction of the claims (i.e., a first derivative of sorts): positive numbers indicate an increase in claims and labor market distress; positive numbers approaching zero indicate the deceleration in new filings; zero would suggest a plateauing of claims; while negative numbers are an indication that businesses and employees are returning toward normal levels of claims. Negative changes in claims should be viewed relative to the cumulative number of claims.
The third number shows the degree of the shock, with Z-scores outside the range of plus-or-minus two standard deviations considered to be outside of normal occurrences.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
Source: BLS, Bloomberg, RSM US
