Pandemic economics has brought about an interesting conundrum: The pace of firings in the economy remains above the monthly hiring data as the unemployment rate falls. Over the past six weeks, first-time claims for unemployment insurance have averaged 867,000, which clearly points to a stalling out of improvement as claims remain at elevated levels.
The decline in the unemployment rate is likely because of the number of people exiting the labor force.
Moreover, that average stands above the 661,000 workers recalled in September. And because of the problems in reporting claims in California, the number could be much higher or lower. It is such during the time of pandemic economics.
Confused? If you’re not confused, you’re not paying attention. The decline in the unemployment rate is likely because of the number of people exhausting their unemployment insurance and exiting the labor force, which of course implies a much higher rate of unemployment (we think up to 3 percentage points) than the official data suggests.
All of this points to the need for another round of fiscal aid to provide relief to the 25 million people on unemployment insurance through the week of Sept. 19, and to the beleaguered small and medium-size firms that are likely not to survive a second wave of the pandemic.
Through the week ending Oct. 3, there were 840,000 first-time claims, down from 849,000 previously, the Labor Department reported on Thursday. Once one adds in the 464,437 on the federal Pandemic Unemployment Assistance, there were 1.304 million new claims for aid.
Continuing claims eased to 10.9 million, which implies a 7.5% unemployment rate. Since mid-March, there have been 63 million claims put forward for unemployment insurance.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.