Seasonally adjusted unemployment insurance initial claims remained at 884,000 for the week ending September 5. The previous week’s total was adjusted up by 3,000, causing the rare equal totals in consecutive weeks. Continued claims for the week ending August 29 were 13.4 million, up 93,000 from the previous week’s revised total. Both figures point to moderation in the steady decline we’ve seen over the past few months.
Despite months of improvements in the labor market, the prolonged economic impact of COVID-19 still results in an unemployment rate at 15.1%. Using Unemployment Claims, this rate is based on estimates from LaborIQ® by ThinkWhy.
While recent methodology changes have led to some skewing of the comparisons, the combined totals of initial and continued claims have declined from May’s peak of 27.6 million to just above 14.2 million. Significant progress has been made recapturing close to half of the jobs lost in the early stages of the pandemic, but challenges persist, and the pace of the rebound will likely slow until we get a vaccine.
Data from the Bureau of Labor Statistics (BLS) also points to the nation approaching the halfway marker of recovering all jobs, though, it is widely believed the second half of jobs will take longer to recoup. BLS reported 22.16 million jobs were lost in the two-month stretch of March and April. From May to August, approximately 10.61 million jobs were regained, meaning the labor market was only about 500,000 jobs away from recovering 50% of the jobs lost early in the pandemic. In fact, if the month of September adds jobs at a pace close to August, we should be very close to that point at the date of this publication.
Weekly unemployment claims indicate the pandemic continues to inhibit the economy’s rebound as millions remain out of work, but the labor market is still progressing. LaborIQ by ThinkWhy expects initial jobless claims for September to hover around 4.3 million, but that number will be adjusted as we understand more about the methodology changes described earlier in this report.
Additional federal aid is available to unemployed workers through FEMA’s supplemental financial assistance program, providing $300 in additional aid. This aid remains a lifeline for many and continues to put money into the economy. Fiscal policy remains a key driver of economic recovery. A vote is expected on a reduced stimulus bill by the Senate as political pressures increase with the 2020 presidential election approaching, but impactful economic legislation remains unclear. While the road ahead remains uncertain, falling unemployment insurance claims continues pointing toward some degree of economic progress, albeit slower than we prefer.
Note - The Department of Labor recently changed its methodology for seasonally adjusted data. The change was applied to data released starting on September 3, 2020, contributing to some of the decline in reported claims in the periods before and after that release. The reason for a seasonal adjustment is to reflect surges in hiring and layoffs that occur routinely throughout the year more accurately. The previous methodology simply could not adjust for the impact and timing of the pandemic to the DOL’s satisfaction, so it made the adjustment to better account for seasonal fluctuations. Comparing trends before and after the methodology is not entirely accurate, but it still paints a consistent picture that unemployment insurance claims have steadily dropped from the peak.
LaborIQ by ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to cities, industries, occupations and business across the U.S.