Still More Than 10 Times Pre-Viral Recession Levels
Initial claims for unemployment insurance fell for a sixth straight week, to 2.981 million for the week ending May 9. Claims were revised slightly higher for the week ending May 2 to 3.176 million.
Claims are down by 57 percent from their peak of close to 7 million in late March. But they are still at levels that would have seemed unconceivable a couple of months ago. Claims were running at a pace of slightly above 200,000 per week in early March, prior to the Viral Recession. And the previous all-time high for claims was less than 700,000, during the 1982 recession. What the U.S. economy has experienced over the past couple of months is simply unprecedented.
Layoffs are abating, but remain extremely high. After job losses of 20.5 million in April, by far the worst month in history, May job losses will also be in the millions.
Also, there’s little indication that hiring is picking up. In the week ending May 2 there were 22.833 million people getting unemployment insurance benefits, up from 22.377 million the previous week. Before the Viral Recession started the level of continuing claims was below 2 million.
The U.S. labor market remains under tremendous pressure, although the pace of job losses is at least slowing. The key question is how quickly businesses will rehire workers in the weeks ahead as restrictions on movement are gradually lifted. If businesses are able to quickly restart and hire back their workers, the permanent hit to the economy from the Viral Recession would be limited. But if businesses remain closed, either because they cannot reopen or their customers won’t return, then temporary job losses would become permanent, extending the Viral Recession and weighing on the eventual recovery. The success of efforts to support small- and medium-sized businesses, such as the Paycheck Protection Program and the Federal Reserve’s Main Street Lending Program, will go a long way in determining what happens to the U.S. economy over the next few months and years.
