Data released on Thursday showed that initial jobless claims rose by 4.4 million on the week ended April 18. Over the last five weeks, the total adds to 26.5 million, or a roughly 16% share of the workforce at its pre-crisis peak in January 2020, noted analysts at Wells Fargo. They consider claims may be a superior measure of the labor market.
Key Quotes:
“One positive in today’s data—despite the still staggeringly high jobless claims, this is the third straight weekly decline, though that is cold comfort to the millions of people who now find themselves out of a job. In some ways these figures still don’t add up. Take continuing claims—the number of people who are actually receiving unemployment benefits—which rose to 16.0 million. While that is a record high, it is too low if we simply tally up the past few weeks of initial claims.”
“The claims data tell us what to expect in the May 8 nonfarm employment report. However, for a few reasons, the claims data may be the superior measure of the labor market. First, claims are a hard count—not a survey like the jobs report. In fact, in March the BLS explicitly noted that it had difficulty collecting responses amid mass shutdowns. Second, claims are weekly and therefore timelier. Third, the number of ‘unemployed’ in the nonfarm report may understate the true figure. The widely followed U3 unemployment rate is the number of unemployed divided by the labor force. To be counted in the labor force, you must be employed or actively searching for work. Many newly unemployed may not be searching for work because they’re (1) waiting for the shutdown to end, (2) dis-incentivized to look because of the generous unemployment insurance or (3) taking care of kids out of school or daycare.”
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