Initial unemployment claims shoot skyward in response to COVID-19 layoffs

Anecdotal evidence of widespread layoffs is now confirmed as initial unemployment claims shoot skyward in response to COVID-19. Here is an eye-popping chart from Calculated Risk:

The horizontal axis represents time, beginning with January 1971. The vertical axis represents the number of initial weekly unemployment claims. The blue vertical bars span official economic recessions, the last beginning in 2008. The red skyrocket is the four-week moving average of initial claims. (A four-week moving average is used to smooth out jiggles and jaggles.)

The adjective “unprecedented” is apt — but entirely inadequate to the scope of current layoffs, both in sheer number and in the narrow time span. Per Calculated Risk: “This was much higher than the consensus forecast.”

The next thing to watch is continued employment claims — how long will a new high in continued unemployment claims be sustained? The longer a high level of continued unemployment persists, the greater the damage inflicted on the economy. Current number: just over 3 million, expected to rise.

According to Calculated Risk:

At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.

Over the next few weeks, continued claims will increase rapidly to a new record high, and then will likely stay at that high level until the crisis abates.

California

According to data released by the Bureau of Labor Statistics (pdf), California is proportionately worse off than the nation:

Intial unemployment claims forthe week ending March 29 jumped to 878,727 from 186,333 — an increase of 692,394. In reporting the numbers, the State noted “Layoffs in the service industry.”