Stress in the domestic labor market continued to intensify as 2.98 million individuals filed first-time jobless claims for the week ending May 9, bringing the total to 36 million during the coronavirus pandemic. Those filing continuing claims for the week ending May 2 jumped to 22.83 million, according to figures released by the Labor Department on Thursday.
About the best that can be said is that jobless claims continue to ease, albeit at an elevated rate. The data clearly demands a sustained and increased policy response to address what is going to be mass unemployment for some time.
The sheer size of those filing continuing claims is greater than the population of Florida.
The insured unemployment rate implied by the continuing claims is 15.7%, and the near real-time unemployment rate implied by the pace of filings is 27.7%.
The May unemployment rate that will be reported during the first week of June will most likely fall somewhere between the two, up from the 14.7% reported in April, which the Bureau of Labor Statistics noted would be closer to 20% if it could accurately capture all those not working.
To put this in perspective, the sheer size of those filing continuing claims is greater than the entire population of Florida, which given the problems in that state processing first-time claims is more than a little ironic. The number of those filing first-time claims would be equal to the populations of Texas and Maryland combined.
The base case here is that whether one uses Florida or Texas as the baseline, removing those states’ entire populations from contributing to the economy tends to underscore the bleak economic outlook put forward by Federal Reserve Chairman Jerome Powell.
Moreover, this data tends to put some data around Powell’s assertion that 40% of households with incomes of less than $40,000 lost a job over the past two months.
This will require sustained fiscal aid, and eventually, once the economy begins to recover, a massive fiscal stimulus program to avoid a general economic depression. Fed liquidity commitments alone cannot avoid that general economic condition.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.