Jobless Claims Slow Again, But Still Hit 3.8M
As the unemployment rate continues to climb and U.S. GDP drops due to COVID-19, states are looking to return to a new normal. Twenty states have or are prepared to implement reopening plans in the coming week. With structured business openings across the country finally here, many hope this is a trend toward putting the country back to work.
Initial Claims Still Topping 3 Million Weekly
The Department of Labor reported that for the week ending April 25, initial unemployment claims receded for the fourth straight week, but still saw an additional 3.839 million initial claims filed. With the current volume of claims and adjustments from the prior week, the U.S. unemployment rate is now estimated to be 24.1%.
The seasonally adjusted initial claims for the week ending April 18 were revised up to 4.442 million. Coupled with early claims and continued claims, the estimated number of unemployed people in the U.S. now tops 39.2 million.
By state, some of the largest non-seasonally adjusted increases in initial claims from March 15 through the week ending April 25 were:
South Carolina joined Georgia as the first states to reopen their non-essential businesses. In South Carolina, apparel, sporting goods, music and flower stores were able to open at 20% capacity, provided social distancing could be maintained. Further, beaches in the state were permitted to open under the jurisdiction of individual town governments. Georgia opened restaurants, retail stores, hair salons and movie theaters with a 39-item checklist that includes employee health checks. Although Georgia movie theaters could open, Hollywood studios have delayed most blockbuster summer releases, causing movie theaters to eye openings in June or July.
Tennessee opened restaurants and retail stores on April 27 at 50% capacity with similar social distancing measures. Whether consumers will show up will be seen in the coming weeks. Some estimate that demand for certain services will snap back quickly. Going to the dentist or hairdresser could be the first stop for many people. Retail stores and airlines, on the other hand, will likely see near-term demand continue to struggle.
As States Start to Open, U.S. Economy Shrinks
U.S. gross domestic product, measured as the value of goods and services, contracted at a rate of 4.8% for the first three months of 2020, according to the Commerce Department’s Wednesday report. This decline marks the likely start of a recession and is the largest drop in quarterly economic output since Q4 2008.
Familiar companies that are typically known for successful financial results posted near-record losses this week as well. Ford posted nearly $2 billion in losses and Southwest Airlines recorded its first quarterly loss in nine years. Starbucks, which is still operating much of its drive-thru service, saw same-store sales drop for the first time in close to a decade. On the other hand, Zoom Video Communications stock has doubled since late 2019, and Microsoft reported fiscal third-quarter sales growth of 15%. The company stated that the COVID-19 pandemic “had minimal net impact on the total company revenue.”
For the four reported weeks of May, initial jobless claims should hover around 11 million. Weekly claims should continue to decelerate, from over 3 million weekly to 2 million or less. The substantial deceleration in initial claims is forecasted to continue into June and July, based on the majority of states opening and restrictions beginning to ease. The magnitude of the deceleration, however, will depend on how many states open and how rapidly businesses bring back their employees.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs and businesses across the country. Stay current with us. We are here to support organizations and provide insights during the economic downturn as well as the recovery phase.