Despite aggressive government stimulus measures, full employment recovery won’t occur anytime soon.
By Manuel Gutierrez, Consulting Economist to NKBA
The number of claims for unemployment increased by 61,000 during the week ended March 27, yet despite this rise, they remain at their lowest level since the start of the pandemic.
Claims have fallen from the 6.15 million number reached in the first week of April last year. The pace of the drop in weekly claims, however, has been very slow. In fact, as can be seen in the top panel of Figure 1, claims have hovered in the 750,000-to-900,000 range since August.
The bottom panel shows the trend in the number of claims over the last six months. From this short-term perspective, it appears that claims have been on a clear downward arc since the beginning of the year, despite the zig-zag nature of the trend.
The slow declining trend in the number of weekly claims suggests that despite aggressive government spending combined with cash stimulus for consumers, it will still take a while for the U.S. economy to recover fully.
At the regional level, states have responded differently to the pandemic and its aftermath. Several, including Maine, New Hampshire and Pennsylvania, registered significantly fewer claims at the end of March this year than March 2020.
The six best-performing states highlighted in the left panel of Figure 2 show the last four months of weekly data. Each point on the lines reflects the difference in claims for that period compared to the first week of March last year. For example, the first point in the green line, which represents Maine, shows that last Dec. 14, there were about 84% fewer claims than in early March 2020.
The end point of that line shows that in the last week of March this year, Maine has improved even further, down 94% from March 2020. Similarly for the other five states in this panel, their latest claims are a significant improvement from last year, when claims were at their peak.
The right panel shows the six worst-performing states. Three of them have issued more claims this year than in March last year: Georgia, Alabama and Mississippi.
Larger, more populous states, like California or Florida, will more likely issue a greater number of claims because of the sheer size of their economy compared to smaller-populated states like New Hampshire. Thus, the absolute number of claims is not an appropriate measure to use when comparing states.
An alternative way is to compare the relative performance of the states is by using the ratio of the number of claims issued to the total employment in the state. Using this ratio, Illinois has the worst record, with 19 claims per 1,000 persons employed. It is the only state in dark blue in Map 1, where darker colors signify worse ratios.
California, Kansas, and Alaska are shaded identically among the highest ratios of claims-to-employment.
California and Texas are the first and second largest states in terms of total employment. However, California has the fifth-largest ratio. Both states fall near the bottom when this criteria is used.
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