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Fannie Mae's Chief Economist Weighs in On Unemployment Report

Initial claims for unemployment insurance were just under 2.4 million for the current reporting week (May 16). That represents a decline of 250,000 from the previous week’s downwardly revised number.

!--more-->"While the initial claims figure continues to trend downward from a peak of 6.9 million on March 28, claims still remain at historically elevated levels and continue to illustrate the unprecedented degree of labor market disruption being registered via reduced economic activity and falling consumer confidence due to the ongoing COVID-19 outbreak," Doug Duncan commented on Thursday. He is the Chief Economist at Fannie Mae.

"Over the last nine weeks, more than 38 million unemployment insurance claims have been filed, representing more than 25% of the workforce, as measured by the level of payroll employment in the February employment report.

"Meanwhile, continued claims, also referred to as insured unemployment, again set a new all-time high, rising to 25 million for the week ending May 9 (this number is reported with a one-week lag relative to initial claims), or more than 16% of the workforce. This figure represents the cumulative number of persons claiming unemployment insurance benefits at a point in time and is therefore a better, though still imperfect, measure of the total extent of joblessness present in the economy.

"Continued claims increased 2.5 million from the previous week’s level, indicating last week’s deceleration may have been an anomaly. Furthermore, as of May 2, states reported processing more than 6 million continued claims for benefits available from emergency compensation programs enacted as part of the CARES Act. This 6 million figure is not already included in the regular continued claims number. These expanded programs provide benefits to persons normally ineligible for unemployment insurance or who have exhausted regular benefits.

"For the week ending May 2, the states with the highest insured unemployment rates were Nevada (23.5%), Michigan (22.6%), and Washington (22.1%). The national figure for the corresponding week was 15.5%. The insured unemployment rate represents the fraction of the unemployment insurance-eligible workforce currently receiving benefits.

"As with the prior weeks, a few caveats make this week’s data difficult to interpret precisely. On one hand, unemployment insurance eligibility rules have been relaxed recently, increasing the number of people who are able to apply. This makes it difficult to estimate the uninsured unemployed share of the workforce. On the other hand, many states reported a significant backlog of unemployment insurance applications due to a lack of processing capacity, indicating that this week’s release may understate the true extent of insured layoffs.”

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