The number of Americans filing for unemployment insurance in the week ending April 11 decreased somewhat compared to the previous week, but new retail numbers show the negative impact of COVID-19 on the U.S. economy is intensifying.
Unemployment Slows for the Week
With the current volume of claims and adjustments from the prior week, alongside the existing 5.7 million previously unemployed in February, the U.S. unemployment rate is now estimated to be 19.1 percent.
More Than 31 Million Unemployed
The Department of Labor reported that for the week ending April 11, initial unemployment claims slowed somewhat, with an additional 5.245 million claims filed. The seasonally adjusted initial claims for the week ending April 4 were revised up to 6.615 million. Coupled with early claims and continued claims, the estimated number of unemployed people in the U.S. is 31.157 million.
By state, some of the largest non-seasonally adjusted increases in initial claims from March 15 to the week ending April 11 were:
Retail Sales Fall Dramatically
Although its data only represents a partial month of impact, the U.S. Census Bureau reported Wednesday that advance monthly estimates for retail sales fell by 8.7 percent in March from a month earlier. Retail sales is a measure of purchases at clothing stores, gasoline stations, restaurants, bars and online retailers, and this drop constitutes the biggest month-over-month decline since the records began in 1992. Food and beverage stores were up 25.6 percent from February 2020, while clothing and clothing accessories stores were down 50.5 percent. With consumer spending driving approximately 70 percent of the U.S. economy, revived consumer spending will depend on a resumption of job availability.
The Beige Book, which includes qualitative data from the 12 Federal Reserve districts, provides detail about some of the halted industries, including retail. The April 15 release states that economic activity contracted sharply and abruptly across all 12 regions in the United States as a result of the COVID-19 pandemic. Many districts said severe job cuts were widespread, including in the Manufacturing and Energy sectors. Several districts noted they were cutting employment via temporary layoffs and furloughs that ideally would be reversed once business activity resumed. The hardest-hit industries — because of social distancing measures and mandated closures — were Leisure and Hospitality and Retail, aside from essential goods. Producers of food and medical products reported strong demand but faced production delays, due to infection-prevention measures, as well as supply chain disruptions. Districts reporting on loan demand said demand was high, both from companies accessing credit lines and from households refinancing mortgages.
Now that the loss of most Leisure and Hospitality and high-impact jobs in the Retail and Manufacturing sectors have been accounted for, initial weekly claims should slow. Expect deceleration toward three million initial weekly claims for the remainder of April. That means total new claims should reach 18.5 million for the month, putting the U.S. unemployment rate at 23.2 percent. Although initial weekly claims grab much of the spotlight, it is also important to keep an eye on the number of continued claims, because they serve as an indicator of people moving back into the workforce.
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.