MNI INTERVIEW: Real-Time Data Fed Seeks Has More Claims Coming

By Brooke Migdon

     WASHINGTON (MNI) - Real-time labor market data being scoured by some Fed

officials signals millions of people haven't yet filed for jobless benefits,

suggesting claims will remain strong even as layoffs slow after the first wave

of coronavirus shutdowns.

     Employment has dropped by 34 million amid the outbreak according to a

survey by Arizona State University and Virginia Commonwealth University

economists, nearly quadrupling the 9 million jobs shed during the 2008

recession.

     Officials have shown a special interest in estimating the number of initial

jobless claims that could be filed in coming weeks, Adam Blandin, an assistant

economics professor at Virginia Commonwealth University, told MNI. It's a key

question for a Fed chairman worried that workers face long bouts of unemployment

and will lose skills permanently, and for state governments facing a run on

benefit funds. 

     The survey's "second wave" was revised to add questions about intentions to

file an initial claim based on input from Fed economists. Determining how many

unemployed workers are currently receiving benefits and how many plan on

applying in the near future could inform an effective policy response, Blandin

said.

     --POWELL DATA LAG

     Fed Chair Jerome Powell suggested Wednesday he's looking for more real-time

job data in an economy that isn't returning to record-low unemployment anytime

soon. "While many standard economic statistics have yet to catch up with the

reality we're experiencing, it's clear that the effect on the economy is

severe," Powell said. 

     The Fed didn't immediately respond to a request for comment sent Thursday

about the real-time labor data study.

     Of the more than 1,000 survey respondents who were not employed as of April

18, 19% indicated they were receiving or had been approved to receive

unemployment benefits. Another 17% intended to apply in the near future or had

submitted an initial claim.

     Those numbers suggest only 17 million unemployed people have been approved

to receive benefits compared with the 26 million initial claims filed between

mid-March and late April. That means initial claims could jump even without

further job losses, according to the survey.

     "We are going to see unemployment insurance claims be at significant

numbers," said Alexander Bick, an assistant professor of economics at Arizona

State who produced the survey with Blandin. "This huge spike that we had is

probably not going to come again, but I wouldn't be surprised if we continue to

see high numbers."

     --PARTICIPATION DROP

     The first two rounds of the survey covered March 29- April 4 and April

12-18 and suggest the unemployment rate reached 16.2% in early April. That is up

from 4.4% in the Bureau of Labor Statistics' March jobs report, though the two

measures aren't directly comparable.

     The unemployment rate is not the most "informative metric," according to

the survey. Many unemployed workers are not actively searching for new jobs and

have therefore exited the workforce by BLS standards. That gap appears in a

labor force participation rate the survey shows dropped to 66.6% among working

Americans 18-64 years old from the 76.1% reported in the government's March

population survey.

     Weekly initial jobless claims peaked during the coronavirus outbreak at 6.6

million in early April following widespread business closures and state-issued

stay-at-home orders. Many of those ordinances are set to expire soon.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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