In the week ending May 2, the advance figure from the Department of Labor for seasonally adjusted initial unemployment claims was 3,169,000, a decrease of 677,000 from the previous week’s revised level. The previous week’s level was revised up by 7,000 from 3,839,000 to 3,846,000. The 4-week moving average was 4,173,500, a decrease of 861,500 from the previous week’s revised average. The previous week’s average was revised up by 1,750 from 5,033,250 to 5,035,000.
According to WalletHub, the states most affected by unemployment included Florida, Louisiana, Georgia, Oklahoma, and Kentucky, many of which are currently experiencing high rates of underwater homes. Some of the least affected states were Vermont, Iowa, Illinois, Arkansas, Wisconsin, and Maryland.
“While state-level data for the week ending May 2 should be considered preliminary estimates due to the way these data are collected, Maryland showed the highest increase, rising 27,000 from the previous week,” said Doug Duncan, Chief Economist at Fannie Mae. “Elsewhere, Florida showed a significant decline, falling 260,000 from the prior week, though still remained at extremely high levels.”
“As with the prior weeks, a few caveats make this week’s data difficult to interpret precisely,” Duncan adds. “On one hand, unemployment insurance eligibility rules have been relaxed recently, increasing the number of people who are able to apply. This makes it difficult to estimate the uninsured unemployed share of the workforce. On the other hand, many states reported a significant backlog of unemployment insurance applications due to a lack of processing capacity, indicating that this week’s release may understate the true extent of insured layoffs. Furthermore, while the layoffs associated with this week’s claims release most likely occurred after the collection period for tomorrow’s April Employment Situation report, we still expect tomorrow’s report to show an extreme degree of labor market disruption, with an unemployment rate for April likely rising well above 10%.”
With these dramatic increases in unemployment, delinquencies and defaults can be expected to increase for the foreseeable future, even during forbearance, Black Knight notes. According to research from the Terner Center for Housing Innovation, UC Berkeley, nearly 16.5 million renter households have at least one worker in an industry likely to be immediately affected by efforts to flatten the curve in the COVID-19 pandemic. Researchers state that the best solution to keep these renters in their home is federally-supported emergency rental assistance.
According to Terner Center researchers, despite significant attempts by policymakers at all levels of government to address the COVID-19 pandemic and its economic consequences, expanded unemployment insurance through the federal CARES Act will be helpful to a degree, but will not be sufficient to address the assistance needed by many of the hardest-hit households.