Initial jobless claims: employment damage continues to spread
Initial jobless claims: employment damage continues to spread
Now that there is more than one month of data from initial and continuing jobless claims since the coronavirus lockdowns started, we can begin to trace whether the economic impacts of the virus are being contained, or are continuing to spread out into further damage.
Nine weeks in, it appears that, insofar as employment is concerned, the damage is continuing to spread.
First, let’s look at initial jobless claims both seasonally adjusted (blue) and non- seasonally adjusted (red). The non-seasonally adjusted number is of added importance since seasonal adjustments should not have more than a trivial effect on the huge real numbers:
There were 2.174 million new claims, which after the seasonal adjustment became 2.438 million. This is a slight decline from last week’s number which was revised down to 2.687 million.
By now, virtually all of the people laid off due to the initial lockdowns in March and early April should have already applied for benefits. Further, last week was the second week after some States “reopened.” Thus these new claims are almost certainly primarily represent the spreading second-order impacts of the coronavirus shutdowns. In other words, this is evidence that new economic damage have continued to spread, and in a very large way.
Next, looking at continuing claims, which lag one week behind, both the non-seasonally adjusted number (red), and the less important seasonally adjusted number (blue) rose:
This tells us that, as of two weeks ago, there were not enough callbacks to work to offset the spreading new damage. If “reopening” leads to a significant new upturn in cases – something that may have begun in the past week – this will only get worse.
Bottom line: confining my comments strictly to the economy, while there have been significant or small rebounds in many of the series, the news on employment is not just bad, but it is still getting worse, albeit getting worse at a slower rate.
I will provide my own subjective data point. My 23 year 8 month job developing and debugging microprocessor and server hardware at IBM will come to an unexpected termination on June 22. That date being conveniently 1 day before my 59 1/2 birthday means I’m not as bad off as some. I really feel for others in my department who are still raising/expecting kids who are caught out in this.
The headlines have covered the massive firings at IBM and I will confirm the damage will be severe; I’m not sure there will continue to be a hardware business at IBM for long. The top leadership are all from the software/computer rental (i.e. “cloud computing/cognitive”) part of the business so you could reasonably presume this has been baked into plans for awhile.
Once I figure out what my rights are I will probably be applying for unemployment insurance benefits for the first time in my life. Maybe another bit of luck there – I expect the benefits to stay relatively fat for awhile. We’ll see.