By Jeffry Bartash, MarketWatch
Note: Massachusetts initially overstated new claims filed through the federal Pandemic Unemployment Assistance program by 1 million. The article has been updated to reflect the corrected number.
The numbers: More than 2.4 million unemployed Americans applied for unemployment benefits last week using the traditional method of reporting initial claims, but the real number was almost 1 million higher if applicants made eligible through a new federal relief program are included.
First-time filings for unemployment insurance totaled 2.44 million last week on the traditional seasonally adjusted basis. While still way above pre-coronavirus levels, new claims have declined for seven straight weeks following the apparent peak of 6.9 million seen in late March.
Economists surveyed by MarketWatch had been looking for 2.35 million new claims in the week ending May 16.
The seasonally adjusted estimate is the number Wall Street has come to expect, but it has overstated jobless claims by several million during the coronavirus pandemic and has become less accurate.
To give a more accurate picture of unemployment, MarketWatch for the first time is also reporting jobless claims using actual, or unadjusted, figures.
New jobless claims totaled a much higher 3.3 million last week if seasonal adjustments are omitted, reflecting persistent pressure on struggling companies to slash payrolls even as the economy slowly reopens for business. ( See this congressional report for a fuller explanation .)
Nearly 2.2 million people filed initial jobless claims in the traditional way through their state unemployment offices in the seven days ended May 16. And estimated 1.1 million new claims were filed in 35 states through the federal government’s temporary Pandemic Unemployment Assistance program, the Labor Department said Thursday.
What happened: Since the coronavirus pandemic and lockdowns started in mid-March, some 35.5 million people have applied for jobless benefits through their states, based on actual or unadjusted totals.
Roughly 8.1 million new claims have been filed via a new federal program that has made self-employed workers and independent contractors such as writers or Uber (NYS:UBER) drivers eligible for the first time ever.
Total new claims since mid-March: almost 44 million.
Not all of these people are receiving benefits, however. Some have had their applications rejected, while others found a new job and still others returned to work.
Continuing claims reported by the states, a close proxy for how many people are getting benefits, rose to an unadjusted 22.9 million from 20.9 million in the week ended May 9. These claims are reported with a one-week lag.
About 6.1 million appeared to be receiving benefits through the federal program as of the week ended May 2, the most recent figures available.
Not all the states have reported these claims, and they have been subject to large revisions, making it hard to determine how accurate they are and to incorporate them into the broader unemployment picture. Labor officials warn it may be awhile until the data get sorted out.
Whatever the case, the devastation has been unprecedented. The unemployment rate shot up in April to almost 20%, unofficially, according to a close reading of the government’s report. The official estimate was 14.7%.
Before the viral outbreak, new jobless claims were in the low 200,000s. Only about 1.7 million Americans were collecting benefits. The unemployment rate was at or near a half-century low of 3.5%.
The big picture: The historic pace of layoffs has tapered off since peaking at the end of March, but unemployment has already ballooned to the highest level since World War II.
Facing pressure to reopen, all 50 states have lifted some restrictions imposed during what was effectively a nationwide lockdown, but the effort to reopen the economy has been slow going.
The U.S. is in a race for time: The longer it takes to fully reopen, the more likely that millions of seemingly temporary job losses become permanent. If that happens, the jobless rate is likely to remain above 10% through the end of the year and hinder a recovery.
What they are saying?: “The key point here is that the trend is rising strongly, signaling that most of the people who have been laid off due to [effects of the COVID-19 pandemic] remain unemployed,” said chief economist Ian Shepherdson of Pantheon Macroeconomics.
Market reaction: The Dow Jones Industrial Average (DOW:DJIA) and S&P 500 (S&P:SPX) fell in Thursday trades.