Another 2.1 million Americans filed for initial jobless claims the week ending May 23, demonstrating that the U.S. economy is still contracting, but there may be a ray of hope as 3.8 million fewer Americans remained on unemployment insurance the week ending May 16, dropping from 24.9 million to 21.05 million as states are reopening.
Mixed numbers like that make it hard to begin to spot a trend. It had gone from 22.5 million to 24.9 million from May 2 to May 9. So there’s a lot of volatility to consider. I think you’d want to see a few weeks in a row where people are coming off of unemployment and back to work before saying that we’d hit a labor market bottom that we are all hoping for.
Well, almost everyone. Apparently top Democratic officials are quietly “dreading” a robust economic recovery before the election in November, fearing that it will fuel a political surge for President Donald Trump.
A Politico story quoted a former Obama official saying “This is my big worry… It’s high — high, high, high, high” that the economy will begin a rapid recovery from the COVID-19 depression before the election in November.
The Obama official was responding to an early April presentation by Jason Furman, a former Obama administration economist proclaiming that “We are about to see the best economic data we’ve seen in the history of this country.”
The case here, and we may be starting to see signs of it, is that because the economy shut down rapidly, furloughing tens of millions of workers, that as states reopen, tens of millions of Americans will quickly be returning to work, resulting in excellent jobs numbers going forward with millions of jobs being created each month. Hence the worry from Democratic political operatives.
Just another reminder of the cynical nature of partisan politics, where to oust an incumbent the opposition party needs to hope for bad news for America.
But it remains speculative. The pandemic , which has claimed more than 100,000 lives, could help keep things closed longer than Furman is projecting.
Again, even with 3.8 million coming off of unemployment benefits, another 2.1 million were added. The result is upwards of 23.1 million jobs lost in the pandemic. Add to that the 5.8 million who were already unemployed and you’re still looking at almost 29 million Americans out of work, and an effective unemployment rate of 17.6 percent, the most since the Great Depression.
Still, that’s down from the 20 percent I projected a week ago — again owing to the volatility expressed in the data plus the week lag in continuing claims data — a trend I’m sure almost all less politically minded Americans hope continues.
So, have we hit a labor market bottom? It’s still too early to tell. We should ask the coronavirus.