Weekly initial claims for unemployment insurance (UI) dropped below 2 million for the first time in 10 weeks. Initial claims for UI fell to 1.9 million on a seasonally-adjusted basis, according to the latest figures from the Department of Labor for the week ending May 30, 2020. This weekly decline is a sign that continuing layoffs are slowing but still elevated, even as total claims reach 43 million. Even as states reopen, claims in the millions are an indicator that the economic pain of the COVID-19 crisis is still acute.
On a non-seasonally-adjusted basis, initial claims for UI fell to 1.6 million, the second week of claims below 2 million, and a steeper decline than for the seasonally-adjusted data. Initial claims likely dropped last week in part due to the Memorial Day holiday. While the seasonally adjusted data should mitigate the holiday effect, the unique scale of the COVID-19 crisis may make seasonal adjustments difficult.
Claims for the new Pandemic Unemployment Assistance (PUA) program—expanding UI benefits to previously ineligible workers—fell to 0.6 million. 36 states reported PUA claims, an increase from 32 last week. PUA claims have been volatile as reporting continues to roll out slowly across states. However, the slow implementation of the program and its reporting may keep PUA claims elevated in the coming weeks.
This week’s report precedes the May jobs report, to be released tomorrow. The steady drumbeat of UI claims in May is likely enough to push the unemployment rate into the high teens, if not over 20 percent. But there is growing disagreement among economists about whether May will represent the worst of the crisis for the job market. While UI claims have acted as a useful real-time indicator thus far, we may soon enter a phase where UI claims understate the health of the labor market as claims remain elevated but hiring picks up.
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