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The record wave of Americans applying for jobless benefits is still climbing by a few million a week, but the more important figure to watch is the number of people actually collecting unemployment benefits. That will give a better idea of how much damage the coronavirus has done to the economy.
Initial jobless claims are forecast to climb by 2.35 million in the week of May 10 to May 16, according to economists polled by MarketWatch, when the data is published Thursday morning.
See: MarketWatch Economic Calendar
Such an increase would push new claims since the coronavirus pandemic began in mid-March to a seasonally adjusted 39 million — almost one of five workers in the labor force.
Not all of these people are actually receiving unemployment checks. Some applications have been rejected, for one thing, while others are still being reviewed.
Read: Fed’s Rosengren sees unemployment rate still at double-digit levels at year end
Yet potentially more important, a sizable number of Americans may have been put back on company payrolls as a result of government subsidies or returned to work. Most states started to ease lockdown restrictions earlier in the month and allow more businesses to reopen.
That’s why it pays to focus now on the number of people actually getting benefits — what are known as continuing jobless claims.
These claims actually fell in the last week for which numbers are available. Thy slipped to 21.1 million in the week ended May 2 from 21.8 million in the week ended April 25, based on actual or unadjusted Labor Department records.
It’s impossible to know for sure how many people have returned to work, but continuing claims is a good stand-in. MarketWatch has included these numbers in the MarketWatch Coronavirus Recovery Tracker
“Continuing claims are going to be one of the best indicators going forward,” said Shawn Snyder, head of Investment Strategy at Citi Personal Wealth Management.
Continuing claims might creep higher since many overwhelmed state unemployment offices are still working through a backlog of applications for jobless benefits. Yet it would be a good sign even if they rose more slowly.
Another outright decline, though, could be a signal that the loss of jobs tied to the pandemic has peaked.
“It is likely no more than a matter of a few weeks before the number of continuing claims begins to decline,” said Eric Lascelles, chief economist at RBC Global Asset Management.
How fast Americans fall off the unemployment rolls because they returned to their old jobs will go a long way in determining how quickly the U.S. rebounds from one of the most devastating economic blows in its history. The government has spent trillions of dollars in an effort to ensure there are jobs for people to go back to.
“It’s absolutely crucial these job losses end up as temporary and not permanent,” Snyder said.
It’s going to a long slog back to normal, though. The unemployment rate probably hit 20% in April, based on an unofficial estimate by government officials.
Read:Great Depression 2020? The unofficial U.S. jobless rate is at least 20%—or worse
Most economists predict the jobless rate won’t drop below 10% until 2021.
