Jobless Claims Still High

As we mentioned last week, Connecticut put that they had 10 times the number of initial jobless claims that they actually had. That was a huge mistake which made the results look worse than they were. That was resolved this week as the number of initial claims was revised down from 2.981 million to 2.687 million.

As you can see from the chart above, initial claims fell again. They were 2.438 million which was above estimates for 2.375 million. The problem is the total is adding up to an impossibly bad number. The unemployment rate is going to explode above 20% in May’s labor report. This situation is still disastrous even though many states have partially reopened. The optimistic projection is for initial claims to fall quicker in the next few weeks.

There has been a 38.6 million increase in initial claims in the past 9 weeks. This was a bad report compared to the prior declines. There was only a 249,000 decrease which is much less than the prior week’s decline of 489,000. This time we don’t have a big revision lower to lean on. Because of how many jobs have already been lost, it’s almost a given that initial claims will fall. We need them to fall quicker.

In some states, the unemployment rate is 30% to 40% as you can see in the chart below.

Georgia still leads the pack even though it was one of the first states to reopen. It’s good that Georgia hasn’t seen a spike in new cases, but its labor market isn’t improving quickly which is a bad sign for the rest of the country. That implies the rally in stocks may have gone too far. Utah has done a fantastic job with testing which has allowed it to have the lowest unemployment rate. There is a 29 point gap between the worst state and the best state which is much more than the 10 point gap at the peak of the last recession.

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