Written by Constantin Gurdgiev, TrueEconomics.Blogspot.in
The economic crisis accompanying the COVID-19 pandemic has nothing more serious than the massive impact on US employment. I have created a collection of graphics covering this which I call “America’s Scariest Charts”.
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The latest data is covering the period through September 12, 2020.
- On a non-seasonally-adjusted basis, there were 13,355,586 Americans with continued unemployment claims in the week of September 12, 2020, an increase of 212,869 on the week prior, but 9,438,559 down on the COVID19 peak reached in the week of May 9, 2020. At the lowest point in pre-COVID expansion period, weekly continued claims stood at 1,350,834.
- In the last 4 weeks through September 12, 2020, average decline in continued unemployment claims was 461,476. At this rate of decline, it will take the U.S. economy 26-27 weeks to recover its pre-COVID19 lows in terms of continued unemployment.
- Current level of continued unemployment claims implies 9.14% unemployment rate.
Per charts above – covering seasonally-adjusted data that has been subject significant methodological revisions starting with September 2020:
- It would take thee U.S. economy 33 weeks from September 12, 2020 to complete full recovery to pre-COVID19 levels of continued unemployment claims
- In seasonally-adjusted terms, unlike in terms of raw data discussed above, September 12, 2020 continued unemployment claims stood at 12,580,000 down 167,000 on week prior.
Employment & Initial Unemployment Claims
Starting with initial unemployment claims (continued claims are covered in the section above) through the week ending September 19, 2020, based on non-seasonally adjusted data:
- Initial unemployment claims fell to 796,015 in the week ending September 12 – marking the lowest number of new claims filed in any week since the start of the COVID19 crisis.
- The new claims rose back to 824,542 in the week ending September 19, bringing the numbers of new claims back above 800,000.
- The latest 4 weeks average new unemployment claims stand at 830,890 weekly claims, which is above the highest number reached since the peak of the Global Financial Crisis.
- Pre-COVID19 period historical high was attained in the week of September 1, 1982 at 1,073,500 new claims filed. The latest reading for September 2020 ranks as the 35th highest in the entire history and 10th highest if COVID19 period data was excluded from the set.
- The latest 3 months cumulative new claims number stands at 13,789,312, down from the COVID19 pandemic peak of 41,865,591.
- Current cumulative count (3 months) is 4,607,312 above the pre-COVID historical high attained March 1, 1975.
- Since the start of the labour markets recovery, average weekly improvement in the initial claims has been a reduction of 224,453 claims per week. This fell to just 305 claims reductions per week over the last 4 weeks. This is not encouraging.
Chart to illustrate the dynamics:
Now, employment figures, based on the seasonally-adjusted non-farm payrolls through August 2020 (the latest data we have):
As it says in the notes on the chart:
- Current reading to pre-crisis high is still down 11,549,000, but we are up on crisis period low by 10,612,00.
- Crisis low employment to pre-crisis high was down 22,160,000, and the running rate of the recovery since the lowest point of employment in COVID19 pandemic has been an addition of 2,653,000 per month on average. With this rate of recovery, it will take the economy 4.4 months to regain pre-COVID19 levels of employment.
- However, last month’s rate of jobs recovery was only 1,332,000, which implies employment levels recovery to pre-COVID19 levels of 6.7 months, at this rate of jobs growth.
Here is analysis of the latest duration of unemployment data, and a look at employment data across past recessions.
As usual with all recessions, average duration of unemployment has fallen in the early days of the pandemic, as new unemployment cases rose dramatically, compared to prior existent claims. Since then, however, average duration has been creeping up.
As the jobs recovery continues, we will be seeing further increases in the average duration of unemployment as a sign of longer term unemployment, so keep an eye for the future updates to the graph.
At the peak of the pandemic, average duration of unemployment fell to just 6.1 weeks or 15.6 weeks below pre-pandemic average. As of the end of August 2020, average duration of unemployment was at 20.2 weeks, or just 1.54 weeks below the last post-recession period average.
Taking a slightly different look at the labour markets, consider current employment levels relative to the 6 months pre-COVID19 average levels of employment:
The chart above helps strip out volatility in the levels of employment across the business cycle by using 6 months average levels of employment for the period prior to the onset of the recession as a benchmark and then relating recession period and subsequent recovery period employment levels to this benchmark.
Clearly, current recovery to-date has been sharp, but given the levels of employment contraction in the first months of the pandemic, even this speed of the recovery is not sufficient to bounce employment levels back to where they were during pre-COVID19 period of economic growth. The chart also shows that recovery in employment has slowed down sharply in August, compared to June and July.
This was last reported: America’s Scariest Charts: 23 August 2020 Updates.
