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First Cut: New and continuing claims ebb in latest data, but should be read with caution

The unadjusted level of initial jobless claims fell 241,467 to 2.614 million in the week ended May 9 to 2.614 million. The tidal wave of claims related to business closures during the COVID-19 epidemic continued to ebb although levels remain at unprecedented highs. Other than the COVID-19 epidemic, the Labor Department cited no special factors behind the numbers. Only one state – Michigan – estimated claims levels in the week. I would be cautious about saying the worst has been seen, but for the moment there’s evidence that efforts by fiscal and monetary authorities have succeeding in mitigating the damage.

I continue to cite the unadjusted data over the data that has been seasonally adjusted. This time of year the seasonal adjustment factors look for the winding down of the school year and hiring of new graduates, and the end of jobs during the cooler weather but before summer jobs start.

There has been a cumulative 33.4 million applications for jobless benefits under insured programs since the March 21 week when schools, offices, and stores began to shut their doors in large numbers.

The unadjusted number of insured claims approved and on the unemployment rolls was 21.143 million in the May 2 week, a modest decline from the record high of 21.773 million in the prior week. Some businesses may have recalled workers due to the availability of government paycheck assistance programs and lifting of business restrictions in some jurisdictions. There are still numerous claims being filed that are probably associated with businesses that could not get access to relief funds and/or whose revenues have fallen to the point that cuts were necessary. The level of continuing claims is likely to rise again in coming weeks.

The unadjusted insured rate of unemployment dipped four-tenths to 14.5% after the record 14.9% in the week ended May 2. It is possible that the rate has crested. However, I would be cautious in making that assessment for a few weeks. The easing of restrictions for business activity needs to be followed by no secondary rise in the spread of COVID-19 that would necessitate reinstatement of quarantines.

Some workers not covered under existing unemployment insurance may have been eligible for benefits under the CARES Act of March 27. Benefits under the Pandemic Unemployment Assistance (PUA) program were up 2.408 million to 3.402 million in the week ended April 25 as more persons applied and were granted payments.

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