With much of California returning to tight coronavirus-related health restrictions, the state last week saw the largest jump in unemployment claims since late March.
California’s initial jobless filings rose by 47,454 to 177,837, according to the Department of Labor’s weekly report, the state’s largest weekly increase in claims since the week of March 28. The bump effectively erased the previous week’s progress, when the fewest Californians filed for unemployment insurance since the pandemic began. In this past week, more Californians filed initial claims than anytime since September.
The U.S. economy hit a similar bump: Jobless claims increased by 137,000 to 853,000, on a seasonly adjusted basis, after claims had fallen by 71,000 the week before.
“Our fears of a significant economic toll taken by the explosion in the COVID-19 cases have now been matched by a spike in new claims for unemployment benefits,” said Mark Hamrick, a senior economic analyst for Bankrate. “As with last week’s report, it isn’t clear how much of this volatility might be linked to the Thanksgiving holiday, amounting to a game of catch-up. But the underlying story and trends, including the slowing number of jobs being added in the monthly employment data, are unsettling.”
While it’s possible the latest numbers reflect a post-Thanksgiving “catch-up” after a dip during the holiday week when offices were closed, economists are bearish on what the ongoing surge of infections and shutdowns could mean without government intervention.
California’s job market had been making steady gains since the initial lockdowns were lifted. In October, the Bay Area added its most jobs since June, but experts were wary of the months ahead.
Following the latest round of stay-at-home orders in California, issued last Thursday, economists had anticipated an increase in filings. But it’s more likely the surge followed the short Thanksgiving week, said Stephen Levy, a senior economist and the director of the Center for Continuing Study of the California Economy, in Palo Alto.
The effects of newest round of restrictions will be felt in the following weeks of unemployment filings, Levy said.
“We know that the next four or five months, at least, are going to be very difficult in California and in our region,” Levy said. “There will be more layoffs in the next few months because of the COVID restrictions and the spread of the virus. So the unemployment situation is not going to get better, really, until the vaccine becomes available.”
California saw a larger jump in new filers than any other state, followed by Illinois (+31,468), Texas (+19,871) and Pennsylvania (+16,366).
“Not surprisingly, claims jumped in California, Illinois, Texas and Pennsylvania: states that have been hit especially hard by the third wave of the pandemic,” said Andrew Stettner, a senior fellow at The Century Foundation.
Levy, the Palo Alto-based economist, believes California will continue to report higher unemployment numbers than the rest of the nation for two reasons.
“One, we have really much more severe activity restrictions than most other places, which will dampen employment in restaurants and retail and tourist activities,” Levy said. “Second, we’re having this enormous surge, even with the activities restrictions, so I don’t see them being removed anytime soon.”