It would be a mistake for policymakers or investors to discount the weekly jobless claims data released on Thursday in light of the recall of 2.7 million people to work in the May U.S. employment report.
Over the past 12 weeks, 44.1 million people have filed for unemployment insurance, which is roughly equal to 27.9% of the 158 million pre-pandemic labor force.
While there are clear inconsistencies in both data sets, the major takeaway is that the real unemployment rate is most likely closer to 20% than it is to 10%. Moreover, mass unemployment is going to be the primary condition that defines the economic narrative going forward, which is consistent with the Federal Reserve’s economic forecast published on Wednesday.
First-time jobless claims increased by 1.542 million for the week ending June 6, the Labor Department reported. Continuing claims for the week ending May 30 slowed to 20.9 million from 21.2 million, which implies an insured unemployment rate of 14.4%.
Data for the week ending May 23 indicate that there were 29.5 million people receiving unemployment benefits. Approximately 9.7 million, or 33% of those, were receiving Pandemic Unemployment Assistance. For that week, 10 states and one territory indicated that there were no first-time claims for PAU, which implies there is a sustained issue in reporting that most likely suggests that there is some underreporting in overall claims.
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