State data indicates the US is headed for another record unemployment week

Last Thursday, the US Department of Labor reported a record-shattering surge in unemployment insurance claims for the week ending on March 21 as coronavirus concerns caused the economy to move into shutdown mode at an unprecedented pace. And while nobody knows for sure what next week’s reports may show, fragmentary evidence available from state unemployment offices shows little sign that the situation is improving.

Christina Animashaun/Vox

Instead of a one-off spurt, last week’s eye-popping initial claims number could be just the leading edge of a larger tsunami that will continue to press forward for several weeks.

Many states are reporting no letdown in claims

The state of Pennsylvania is unusual in producing timely, publicly available, day-by-day statistics on unemployment claims. They show clearly that next week’s data, for Pennsylvania at least, is on track to break last week’s record.

The Pennsylvania data shows the current week’s claims running slightly lower than last week’s claims, but that’s because it only has six days’ worth of claim data for the current week. It’s pretty clear that when Saturday’s numbers are added they’ll smash through last week’s record.

Some other states had even bleaker news, albeit in more anecdotal form. Robin Roberson, the executive director of the Oklahoma Employment Service Commission, predicted to local television reporter Emily Collins that “our record here in the state was set back in 1991 with over 9,000 initial claims in one week; of course last week we almost doubled that ... we will double last week’s again this week.”

Colorado officials told Aldo Svaldi of the Denver Post to expect claims to triple in the week ending March 28 compared to the previous week. New Mexico reported 17,187 initial claims in the week ending March 21, and is now already at 32,000 initial claims based on the first four days of last week.

The crush of claims is so severe that, as Arindrajit Dube and Jesse Rothstein explain in a policy brief for Economists for Inclusive Prosperity, it’s crushing state unemployment offices’ actual ability to process the claims. Dube and Rothstein advocate flipping the normal process and starting to pay benefits before doing the work to verify eligibility. Then officials could claw back and penalize illegitimate claims after the fact, rather than allowing a bottleneck of claims processing to prevent people from getting the help they need.

And this massive volume of unemployment claims could only be the beginning. The bigger picture is that while claims are currently piling up because of Covid-19-related business closures, there’s a risk that we’re going to see cascading waves of failures.

Job losses can beget job losses

Millions of workers in the food service, hospitality, and non-grocery retail sectors are facing job losses because of lockdown measures put in place as an effort to control the spread of coronavirus.

Lots of other jobs, however, continue uninterrupted despite the trouble. You can still order furniture handcrafted in Vermont from sustainably harvested North American wood. My psychotherapist friend is offering patients videoconference sessions. Apple just released a new MacBook Air. Farmers are still growing food and truckers are delivering it to grocery stores. Vox Media’s many brands are still publishing.

But there’s a broad risk to the economy. The people losing jobs in March are going to have to cut back on their spending. That’s going to mean lost income for people working in other sectors, whether or not their business is directly impacted by the virus. And people who are just generally nervous about economic conditions are unlikely to go out and splurge on new furniture or laptops. With sales expectations for pretty much everything pointing downward, the advertising market is drying up, creating problems for media companies that in a literal sense are gaining audience from the crisis rather than losing customers.

This is what makes recessions so difficult to cope with. What starts as a discrete, albeit large, problem related to public health measures swiftly ripples out to become a general downturn. And based on the best evidence available, the pace of the economic pain is only increasing.

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