Takeaway: Initial state claims (NSA) of 2.17M + PUA claims (NSA) of 2.23M combined for total claims of 4.4M. This equates to joblessness of >20%.

Below is a complimentary research note from our Financials analyst Josh Steiner. If you are an institutional investor interested in accessing our research email sales@hedgeye.com

State Claims + PUA Claims Weekly | Unemployment Claims (05/21) - 05.08.2020 jobs tree stump cartoon


Observing the table below, in addition to the 2.17 million regular state claims (NSA), there were an additional 2.23 million Pandemic Unemployment Assistance (PUA) claims filed.  Recall, PUAs are part of the CARES Act and cover workers ineligible for traditional state UI assistance, including independent contractors, self-employed individuals, and others as detailed in the CARES Act.

In other words, the real, total initial claims (NSA) filed last week is actually 2,174,329 + 2,226,921 = 4,401,250, up a whopping +37% from the week prior week. 

State Claims + PUA Claims Weekly | Unemployment Claims (05/21) - PUA2

Jobless claims are likely tracking in the vicinity of ~35 million now. As of May 2nd, there were 27.3 million people collecting insurance (State: 20.8 million + PUA: 6.1 million + Other: 0.4 million). In the last two weeks, a further 3.1 million PUA + 4.5 million State have filed. Thus, 27.3 million + 3.1 million + 4.5 million = 35 million, which on a labor force base of 152 million (35/152), yields an unemployment rate of 23%. Now, to be fair, a portion of those collecting unemployment insurance are doing so because of reduced hours and not full unemployment. These workers are classified under "Workshare" programs and are reflected in the second row from the bottom of the following table. Nevertheless, it's safe to say that the unemployment rate reflected in these figures likely exceeds 20%.

State Claims + PUA Claims Weekly | Unemployment Claims (05/21) - PUA3

To summarize, either the economy is much worse than the market thinks or there is an unemployment insurance gravy train that everyone is jumping onto - or a little of both.

Initial jobless claims (SA) recorded another +2.44 million this week, while continued Claims (SA) shot up to an all-time high of 25.07 million. Given the unprecedented speed with which initial claims have manifested, our view remains that the best way to contextualize the magnitude of the labor market crisis is to look at continued claims. Continued claims of 22.8 million are currently ~3.8x the previous high-water mark of ~6.6 million set during the financial crisis. 

State Claims + PUA Claims Weekly | Unemployment Claims (05/21) - Initial

State Claims + PUA Claims Weekly | Unemployment Claims (05/21) - Continued