Unemployment claims are a useful indicator of the health of the state’s economy. Today the U.S. Department of Labor released data on the number of unemployment claims processed by state labor departments during the week of March 22 to March 28, the second week since the Governor issued a statewide “shelter-in-place” order in response to COVID-19. Below we offer some observations on these weekly claims data.
Historically High Claims. California had 878,727 initial claims during this period. This is far and away the highest number of weekly claims ever, eclipsing last week’s total of 186,809 and the record high prior to COVID-19 of 115,462.
Level of Claims in California in the Middle of the Pack Among Large States. Over the last two weeks California has processed about 1 million unemployment claims. These claims represent about 6 percent of the state’s workforce. On this metric, California is in the middle of the pack among large states.
COVID-19 Slowdown Already Rivals the Great Recession. In a post last week we noted that, despite a significant jump in claims, the overall severity of unemployment was not yet on par with the Great Recession. With the massive jump in claims seen during the week of March 22, this story has changed completely. The total increase in unemployment claims in the state since March 15 is now on par with the total increase seen during the entirety of the Great Recession. That being said, a major factor that contributed to the severity of the Great Recession is that so many people were unemployed for such a long period of time. While the current increase in the number of unemployed workers is on par with the Great Recession, it remains to be seen how long these workers will remain without work.
High Level of Claims Will Continue. Last week we pointed out that there is a relatively strong historical relationship between Google search interest in unemployment insurance during a week and the number of unemployment claims in that same week. Search interest spiked to unprecedented levels about three weeks ago and has remained elevated. As a result, we anticipate that claims will remain at very high levels for at least the next two weekly reports from DOL.
