Now in its seventh week, the U.S. unemployment crisis continues to deepen. According to Thursday’s data release from the Department of Labor, 3.8 million more Americans filed for unemployment insurance during the week ending April 25. Although that represents the fourth consecutive week of decline in seasonally adjusted initial claims, the number remains historic. (Remember, no single week prior to March 21 had ever seen even 1 million initial claims since 1967, the earliest year that data is available from the Federal Reserve.) If we add up all of the initial claims filed since the coronavirus recession began,1 more than 30 million people — or nearly 19 percent of the total U.S. labor force — have filed for unemployment claims over the past month and a half.
Experts have all had their eyes trained on initial unemployment claims, both because they tell us about the ongoing scale of the crisis and because they’re one of the rare weekly indicators of the economy at large. Some economists think this weekly trend of massive unemployment numbers includes industries that weren’t hit hard at first but are now beginning to feel the ripple effects of the recession as it spreads through the economy. “Job separations will likely remain high for a while, as softer demand spills over into industries not initially directly affected by shutdowns,” Citigroup economist Andrew Hollenhorst told Reuters. (This is corroborated by sources such as the hiring site Indeed, which has consistently seen 30 to 40 percent fewer jobs posted than the norm since late March.)
Of course, this week’s data still includes many unemployment claims that overwhelmed state agencies were not able to process immediately after they were filed. And there are still many workers struggling week by week in industries directly affected by coronavirus shutdowns, such as in restaurants or other parts of the service sector. Several weeks ago, we pointed to research by St. Louis Fed economist Miguel Faria-e-Castro, who estimated that nearly 50 million jobs were at risk as the country tried to mitigate the virus’s spread. If our current slight downward pattern of initial claims continues each week,2 we would reach that mark by July.
But will the numbers continue in that same pattern? One of the hallmarks of this crisis is the high number of furloughs — people who are out of work now (and therefore able to file initial claims) but who could potentially return to their jobs when the economy restarts. A recent analysis from the California Policy Lab found that 90 percent of that state’s workers who filed for unemployment in early April expected to go back to their previous jobs, a much higher share than the 40 percent who gave that response in February. With many states moving toward reopening at least some businesses by next week, a large number of those who filed claims earlier in the crisis could potentially be returning to work.
That’s why another important indicator will be what’s called continued claims, or insured unemployment — the number of people actually receiving unemployment benefits in any given week. (According to the Department of Labor, that number was 17,992,000 for the week ending April 18.) It lags a week behind initial claims, since not all initial claimants are actually eligible to receive payments, but it gives us a faster-moving measure of where the crisis might be headed than the traditional unemployment rate, which is released each month. The decline of continued claims tends to go in lockstep with the end of recessions, and it will be important to watch how that metric changes as the restarting economy begins to go through another phase of incredible upheaval over the next month.