There are now 11 states with a million or more newly unemployed people and 11 other states with at least a half-million added to the unemployment rolls. That brings the total to 36.5 million claims of newly unemployed persons processed by the state employment agencies in the eight weeks since the outbreak of the coronavirus in March.
We can expect claims to remain high as several states work through the backlog of claims and as businesses reduce staff.
Initial filings for unemployment benefits increased by 3 million newly unemployed people nationally during the week ending May 9 on a seasonally adjusted basis. We can expect the trend in cumulative claims to remain high as several states continue to work through the backlog of claims and as declining household income and consumer spending prompt more businesses to reduce staff.
Continuing jobless claims — which are reported with a week’s lag — increased to 22.8 million, for an implied “Insured” weekly unemployment rate of 15.7% — defined as people receiving unemployment benefits as a percentage of the labor force — for the week ending May 2.
We expect the insured unemployment number to increase as newly out-of-work people begin to receive their benefits in the months ahead and for the 14.7% headline monthly unemployment rate reported in April to follow quickly along.
Initial jobless claims have been decelerating since their peak on March 28, with this week’s decline in claims reaching nearly 200,000. Keep in mind, however, that two states (California and New York) have reported 2 million or more people applying for unemployment benefits since the outbreak of the coronavirus — with Florida likely to join them next week as the Florida state agencies work through their backlog.
California and New York are in addition to the nine states have reported at least a million cumulative claims, the 11 states that have reported a half-million or more newly unemployed people, and 10 states with a quarter million.
These are staggering numbers of out-of-work people, who are unlikely to buy a new car or move to a new house much less spend anything on non-essential items.
Five states (Connecticut, Florida, Georgia, South Dakota and Washington) reported significant increases this week as states continue to work through backlogs of filings and as the spread of the virus makes its way across the country.
Seven states, including New York, reported weekly changes in filings that were not significantly different from pre-virus (normal) occurrences. While that would hopefully be a signal of a plateauing of initial claims, there have been too many inconsistencies in the reporting to have any confidence that the worst is behind us.
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
