Initial Claims for Unemployment Benefits Remain Stubbornly High
Initial claims for regular state unemployment insurance totaled 870,000 for the week ending September 19, up 4,000 from the previous week’s upwardly revised tally of 866,000 (see first chart). The latest week is the 27th week of historically massive claims. Prior to the lockdowns, initial claims were running around 230,000 (see first chart).
The number of initial claims surged in the initial phase of government lockdowns, hitting almost 7 million for the week ending March 28. Initial claims declined fairly rapidly over the next 10 weeks but since early June, the declines have slowed significantly with some weeks showing slight increases. Persistent initial claims at such a historically high level remain a very troubling sign for the labor market recovery and the economy.
The number of ongoing claims for state unemployment programs totaled 12.580 million for the week ending September 12, down 167,000 from the prior week (see second chart). For the same week in 2019, ongoing claims were 1.672 million. The insured unemployment rate for these programs was 8.6 percent, down from 8.7 percent in the prior week.
The total number of people claiming benefits in all unemployment programs including all emergency programs was 26.045 million for the week ended September 5, down 3.723 million from the prior week. While there has been improvement from the catastrophic results in March and April, the current level of weekly initial claims is still very high and continuing claims are still massive (see second chart).
Government-imposed restrictions intended to slow the spread of Covid-19 continue to wreak havoc on the economy and the labor market. The longer consumers remain restricted and businesses remain closed or limited, the more uncertain a labor market recovery becomes and the higher the probability of a slow and drawn-out economic recovery.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
