Friday, August 21, 2020

Sure, unemployment claims are lower. But they're still at record levels

I wanted to give some more perspective on how many people have been laid off in the last 6 months, because I think COVID World makes us shrug and not make us realize how far in the hole we are, and that things are still bad for a lot of Americans.

I wanted to look at the number of new unemployment claims since COVID-19 broke out, and compare it to the last time we fell into recession and unemployment spiked in this country - the Great Recession. I decided to start the comparison with July 2008, as that was the first month where new unemployment claims went above (a seasonally adjusted) 400,000 a week, and then use March 2020 as my starting point for our current recession.

Even with our "lower" amount of new unemployment claims these days, we're still seeing almost twice as many people filing each week as they were in December 2008 - 3 months after Wall Street officially started to implode.

And while continuing claims have dropped a bit from their peaks in June, there still were nearly 28 million Americans filing some type of unemployment claims in the early part of this month (the last week we have for continuing claims in all of these programs).

An especially concerning part of that number is that the extended unemployment claims figure keeps going up. The extended unemployment benefits kick in after someone hits the regular state limit of no work (in Wisconsin this is 26 weeks), and gives an extra 3 months of assistance. The number of Americans receiving extended claims was at its highest level yet on August 1, at nearly 1.4 million, and it was 400,000 higher than what we had on July 4.

Long-term unemployment is where the real economic problems begin, as people's standard of living usually has to be changed even more than the initial layoff may have caused. And it's coming at the same time that the $600-a-week in additional unemployment benefits has been cut off, with any type of seasonal Summer employment starting to end.

We've been fortunate that more jobs have come back vs those that have been lost since April due to the reopening of several sectors of the economy, which is why we've added back millions of jobs in the last 3 months unlike the 2.8 million jobs lost in the last 6 months of 2008. But August has had no difference from July in terms of what sectors of our economy are open, and in fact, some sectors have become more restricted in recent weeks.

Which makes me wonder if the 3 months of recovery is on borrowed time. Partly due to the continued elevated level of new unemployment claims, partly due to the lack of sources of restored jobs, and partly due to the lack of stimulus coming to the unemployed from the federal government. Not a good combination, and that's why we need to pay more attention to the total numbers of unemployed compared to the "improvement" that a lot of media says is coming from a still-unprecedented amount of people filing unemployment claims.

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