Continued Jobless Claims Fall, Suggesting an Economic Rebound
With initial claims slowing again this week, states are continuing more cautiously in their unemployment processing efforts. New programs like Pandemic Unemployment Assistance, with very particular processing rules, as well as fraud-related claims look to slow the progress many states have been making.
Consistent Decline in Weekly UI Claims
After reaching a record in the week ending March 28, weekly initial jobless claims as reported by the Department of Labor have been on a steady decline. For the week ending May 23, initial unemployment claims receded again, with 2.123 million initial claims filed. Using UI data, this brings the estimated U.S. unemployment rate to 23.8%. Continued claims, the strongest indicator of people returning to work, fell from 24.9 to 21.0 million for the week ending May 16. This suggests the economy has begun the early stages of recovery.
The seasonally adjusted initial claims for the week ending May 16 were revised up to 2.438 million. Combined with pre-pandemic and continued claims, the projected number of unemployed people in the U.S. is currently between 37.2 million and 40.7 million.
By state, some of the largest non-seasonally adjusted initial claims from March 15 through the week ending May 23 were:
Part of the CARES Act, the long-awaited Pandemic Unemployment Assistance funds are now being released to aid gig, contract, and self-employed workers. Due to PUA being a brand-new program and to ensure accuracy, additional assessment during the application process is being conducted. This has delayed reporting and payments for those who submitted applications at the start of the program on April 21. For the week ending May 23, New York (+250,130), Michigan (+196,235) and Massachusetts (+147,594) saw the largest number of PUA claims. These claims, considered an alternate program to the normal UI reporting, are not included in the overall UI figures.
Unemployment Fraud Will Slow Legitimate Claims
Fraud networks around the U.S. have emerged recently, as states uncover those still with jobs are being claimed by criminals as unemployed. Evidence of fraudulent claims have been seen in Maine, Florida, Massachusetts, North Carolina, Oklahoma, Rhode Island and Wyoming. A sophisticated fraud network focusing on Washington state’s unemployment system claimed hundreds of millions of dollars before officials identified and stopped the coordinated attack. While states were initially trying to process claims as quickly as possible, they may now need to slow processing to further their investigative efforts. Maine officials state that turnaround times on claims could now take 10 to 14 days, up from a two-day turnaround.
For June, initial jobless claims should hover around 7.5 million for the month. Claims are expected to continue declining to an average of 1.75 million weekly, depending on the rehiring rate for the temporarily unemployed. A substantial deceleration in initial claims is forecasted to continue through June and July, based on the majority of states proceeding with their phased reopenings. The more impactful number to watch will be continued claims, which signal that people are returning to work.