- Initial jobless claims moderated slightly, but still remained elevated at 5.25 million for the week ended on April 11th. This was broadly in line with market expectations (+ 5.11 million). Relative to the previous week, claims were down by 1.37 million. Continuing claims rose to 11.98 million for the week ended on April 4th from 7.45 million in the week prior.
- California had the largest number of job losses at 660,966. Followed by New York (+395,949), Georgia (+317,526), Texas (+273,567), and Pennsylvania (+238,357).
Key Implications
- The layoffs continued to pile up with another extraordinary number of claims for unemployment benefits last week. In total, there have been 22 million claims filed over the last four weeks. This represents about 13% of the total labor force. In the weeks ahead, claims will likely remain elevated as some states continue to be overwhelmed with unemployment insurance applications. For April as a whole, the number is likely to total 25-30 million job losses, taking the unemployment rate to the 15-20% range.
- Today’s release did contain a sliver of good news however. The weekly number of claims appears to be coming down from its peak, suggesting that policy efforts meant to keep workers employed, specifically through the Paycheck Protection Program (PPP), are beginning to bear fruit.
- The take up in PPP has been tremendous so far. Since its launch on April 1st, almost $325 billion of the budgeted $350 billion has been approved for distribution. According to Small Business Administration approvals data through April 13th, the construction sector has been the main recipient of the loans, taking 14% of the loans approved to date. Professional, scientific, and technical services, manufacturing, and health care and social assistance were not that far behind, accounting for 12% to 13% of the loans.
- With PPP quickly reaching its limit, Secretary Mnuchin has promised to add another $250 billion to the program. This, however, hit some obstacles last week as Congress could not come to agreement on the new aid bill. It is crucial that additional funding is swiftly provided to this program. Main street is making it absolutely clear that these loans are needed to help businesses stay afloat, and keep employees on the payroll. Without these loans, bankruptcies could rise, resulting in an even bigger collapse in the U.S. labor market.
