Have we hit bottom for job losses? Key stat indicates so

Number of people with ongoing unemployment claims declines

California’s reeling job market, knocked off its feet by government-mandated business shutdowns amid the coronavirus outbreak, may have staggered to a bottom, economists say.

The evidence that the worst may be over for job losses in California? A sharp decline in the number of people with ongoing unemployment insurance claims in California, a statistic known as continuing claims, according to economic experts.

“This doesn’t mean the economy is in great shape, but the big drop in continuing claims is one of the green shoots that we are

looking at,” said Brian Wesbury, chief economist with First Trust Advisors, an investment firm. “It’s really going to be continuing claims that show when the job market is improving and employers are calling workers back.”

Tucked away in the most recent official federal report on federal unemployment claims are statistics for early May that show a dramatic drop in continuing claims for California.

“The continuing numbers for unemployment claims are the ones that show we are already at the bottom,” said Christopher Thornberg, an economist and founding partner with Beacon Economics. “The fact that continuing claims are dropping is evidence that we’re past the worst.”

Scott Anderson, chief economist with Bank of the West, said those declines are a direct result of the reopening of the country and California. “New layoffs are still occurring, but at least nearterm, the unemployment rate is peaking,” he said.

For the week that ended May 16, the number of California workers with claims for unemployment insurance totaled 2.12 million, down 40% from continuing claims filed the prior week, the U.S. Department of Labor report showed. The May 16 claims were 1.44 million below the 3.56 million California workers who filed continuing claims for the week ended May 9, according to the report.

“Continuing claims could be falling because people are being recalled to their jobs,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at University of the Pacific. “I do think we are at the bottom when it comes to unemployment.”

The pace of reopening businesses has sauntered ahead amid government restrictions to battle the coronavirus.

“As the state reopens, many of those furloughed will be re-employed,” said Jerry Nickelsburg, a veteran economist and director of the UCLA Anderson Forecast.

Still, California, the Bay Area and the United States overall remain locked in an employment nosedive amid business shutdowns that state and local government agencies have ordered in a quest to combat the spread of the coronavirus.

Over the four weeks that ended May 23, initial unemployment claims in California averaged 246,400 a week. That figure is dramatically below the peak of 1.06 million unemployment claims filed during the week that ended March 28.

Nevertheless, the recent figures remain more than five times higher than the 44,800 weekly average of initial unemployment claims filed in California over the first two months of 2020.

“We’ve definitely turned the corner, but there there are more bumps ahead,” Michael said.

Case in point: The Bay Area, the state and the U.S. all must dig out of a historically huge hole of job losses before their respective economies can turn around.

In December, the Bay Area’s unemployment rate was at an all-time record low of 2.4%, according to seasonally adjusted figures compiled by Beacon Economics and UC Riverside derived from state Employment Development Department statistics. In April, the Bay Area jobless rate skyrocketed to 13.8%.

During March and April, combined job losses for the two months totaled 596,000 in the Bay Area, 2.56 million in California and 21.42 million in the United States.

Despite the optimism, it might take a few more weeks to be certain if the plunge in ongoing jobless claims is a pattern firmly tied to an improving job market.

“This will be a short and sharp recession,” Thornberg said. “Very sharp and very short.”