Initial filings for unemployment benefits increased by 3.2 million newly unemployed people during the week ending May 2. That means that a cumulative 33.5 million claims of newly unemployed people have been processed by the state agencies in the seven weeks since the economies of most states were shut down to prevent the spread of the coronavirus.
The decline in Florida implies that there is still a large backlog of unprocessed claims
We can expect the trend in cumulative claims to remain high as declining household income and consumer spending prompt more businesses to reduce staff.
Moreover, the decline of claims in Florida implies that there is still a large number of individuals in the claims pipeline and we urge caution when interpreting the data. The pace of claims will remain elevated and sure to send the unemployment rate higher in the coming weeks and months.
Continuing jobless claims, which are reported with a week’s lag, increased to 22.6 million, for an implied “Insured” unemployment rate of 15.5% — defined as people receiving unemployment benefits as a percentage of the labor force — for the week ending April 25. That should give a clue to Friday’s release of the official monthly employment data for April and for what we might expect for the months ahead.
Although there were 677,000 fewer claims than the previous week, that should not be viewed as an easing of the misery among households. There are just too many people out of work to suggest that this week’s report is an improvement.
Eight states have reported a million or more people applying for unemployment benefits since the outbreak of the coronavirus, and 10 states report a half-million or more newly unemployed.
And there were two Southwestern states (New Mexico and Oklahoma) and five East Coast states (Maine, Connecticut, New Jersey, Maryland and Puerto Rico) that reported significant increases this week, with self-employed and gig workers becoming eligible and as states continue to work through backlogs of filings.
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.
Sources: BLS, Bloomberg, RSM US
