While the pace of first-time jobless claims has declined over the past few weeks, such an improvement is still akin to saying someone has turned down the heat in hell. It is clear that the U.S. labor market remains impaired as first-time jobless claims increased by 1.5 million for the week ending June 13, and continuing claims advanced by 20.5 million for the week ending June 6. This is the thirteenth straight week in which claims have increased by more than one million.
To put some context around these numbers: the pre-pandemic peak in initial jobless claims was 695,000 for the week ending Oct. 1, 1982 during the 1981-81 recession. The pre-pandemic peak for continuing claims was 6.6 million for the week ending May 29, 2009, during the Great Recession.
Policymakers would be wise to provide further support for millions of Americans that rely upon unemployment insurance ahead of the fast approaching fiscal cliff at the end of July. Failure to extend those benefits would damp household consumption and put at risk what we think is a nascent economic recovery.
Moreover, we do not think that the pace of firings in the economy will decline in a linear fashion. As large firms ascertain the damage to the domestic labor market and household consumption and the increasing pace of bankruptcies, there will be further layoffs of well-paid white-collar jobs, which will likely get the attention of policymakers. To the policymaking community, it is one thing for 40% of households making less than $40,000 per year to bear the brunt of job losses. The loss of well-paid jobs in education, trade and finance is another.
The number of individuals filing for pandemic unemployment assistance increased to 760,000 from 694,463. Over the past 13 weeks, 45.7 million have filed for unemployment insurance. During the past three months, roughly 29% of the American workforce has endured a period of unemployment. The insured unemployment rate implied by continuing claims remained at 14.1%.