Initial Claims for Unemployment Benefits Rise as Restrictions Sustain Uncertainty
The fallout from government-imposed restrictions intended to slow the spread of COVID-19 continues as initial claims for unemployment benefits rose in the latest week. The longer 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.
Initial claims for unemployment insurance totaled 1.106 million for the week ending August 15, a rise of 135,000 from the previous week’s 0.971 million. The latest week marks the 21st week out of the last 22 weeks of historically massive claims above one million following the implementation of business and consumer lockdowns intended to fight the COVID-19 pandemic. Prior to the lockdowns, initial claims were running around 230,000, less than one-fourth of their current level.
The number of ongoing claims for state unemployment programs totaled 14.8 million for the week ending August 8, down 636,000 from the prior week (see chart). The insured unemployment rate for these programs was 10.2 percent, down from 10.6 percent in the prior week.
The total number of people claiming benefits in all unemployment programs including all emergency programs was 28.1 million for the week ended August 1, down 197,000 from the prior week (see chart). The national Employment Situation report for July was released on Friday, August 7 and showed a gain of 1.8 million jobs. The total number of officially unemployed fell to 16.34 million in July, a drop of 1.4 million from the 17.75 million in June (and from 21.0 million in May and 23.1 million in April – see chart). The number of officially unemployed in February before lockdowns were implemented was just 5.8 million, as reported in the household survey portion of the report. For comparison, the peak number of unemployed during the last recession, The Great Recession, was 15.4 million.
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.
