Market participants got another pulse check on the U.S. labor market Thursday, as the world continues to grapple with the COVID-19 pandemic and ahead of the highly-anticipated April jobs report.
Another 3.169 million Americans filed for unemployment benefits in the week ending May 2, exceeding economists expectations for 3 million initial jobless claims. The prior week’s figure was revised higher to 3.846 million from the previously reported 3.839 million. So far over the past seven weeks, more than 33 million Americans have filed unemployment insurance claims.
Continuing claims, which lags initial jobless claims data by one week, totaled a record 22.65 million in the week ending April 25. The prior week’s 17.99 million continuing claims was revised higher to 18.01 million.
The weekly number of jobless claims has been steadily declining even as the cumulative number remains high.
“Jobless claims in the U.S. slowed again last week, but not as much as hoped. As the economy re-opens more broadly this process should accelerate, but the economic pain resulting from mass unemployment will restrain the recovery process,” ING economist James Knightley said in a note Thursday.
“This report tells us nothing about hiring though, which is likely to remain weak for some time to come given the economically depressing effects of social distancing, consumer caution relating to Covid-19 fears, travel restrictions and the legacy of tens of millions of people being out of work,” Knightley added.
Certain states got hit harder than others last week, as backlogs continue to get processed. California saw the highest number of initial jobless claims at an estimated 318,000 on an unadjusted basis, down from 325,000 in the prior week. Texas reported 247,000, down from 254,000 in the previous week. Georgia had an estimated 227,000 and New York reported 195,000. Florida, which had the highest number of claims in the prior week, reported 173,000 in the week ending May 2, down considerably from 433,000.
Thursday’s weekly claims report comes ahead of the Bureau of Labor Statistic’s April jobs report and on the heels of the ADP employment report. Wednesday morning, the U.S. private sector lost 20.23 million jobs in April and was the worst loss in the report’s history, according to ADP.
“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” ADP Research Institute Co-Head Ahu Yildirmaz said in a statement.
“Additionally, it is important to note that the report is based on the total number of payroll records for employees who were active on a company’s payroll through the 12th of the month. This is the same time period the Bureau of Labor and Statistics uses for their survey,” Yildirmaz added.
Though the ADP report is not always a reliable indicator of what the BLS report will illustrate, it does provide a bit of insight into the health of employment in the U.S.
“The report is a bit light on details of any potential methodological problems this month. The ADP counts anyone on the active payroll rather than just people who were paid during the month, which is the official non-farm payroll definition. Within many people put on temporary layoff, that could have created a discrepancy, with those people still on the active payroll, but not counted in the official non-farm payroll figures and also qualifying as unemployed in the other official household survey,” Capital Economics said in a note Wednesday.
Economists polled by Bloomberg expect 21.3 million jobs losses in April when the BLS releases its report Friday morning, down significantly from 701,000 job losses in March. The unemployment rate is estimated to have surged to 16% from 4.4% in the prior month.
“April jobs report should go down in infamy,” Bank of America economists said in a note Wednesday. “The April employment report will reveal unprecedented job losses as the economy has been shutdown to control the spread of COVID-19.” The firm projects 22 million job losses during the month amid the global pandemic.
One important thing to note with April’s jobs report is that there might be some discrepancies in the two surveys. A furloughed person, who is not working but has not been laid off, will be classified as unemployed or temporarily laid off in the household survey. However, if they were paid at any point during the establishment survey period, they will be classified as employed.
As of Thursday morning, there were 3.7 million confirmed coronavirus cases and 264,000 deaths globally, according to Johns Hopkins University data. In the U.S., there were 1.2 million cases and 73,000 deaths.
HENRY KOTULA 
CAMBRIDGE – Aristotle was right. Humans have never been atomized individuals, but rather social beings whose every decision affects other people. And now the COVID-19 pandemic is driving home this fundamental point: each of us is morally responsible for the infection risks we pose to others through our own behavior.
In fact, this pandemic is just one of many collective-action problems facing humankind, including climate change, catastrophic biodiversity loss, antimicrobial resistance, nuclear tensions fueled by escalating geopolitical uncertainty, and even potential threats such as a collision with an asteroid.
As the pandemic has demonstrated, however, it is not these existential dangers, but rather everyday economic activities, that reveal the collective, connected character of modern life beneath the individualist façade of rights and contracts.
Those of us in white-collar jobs who are able to work from home and swap sourdough tips are more dependent than we perhaps realized on previously invisible essential workers, such as hospital cleaners and medics, supermarket staff, parcel couriers, and telecoms technicians who maintain our connectivity.
Similarly, manufacturers of new essentials such as face masks and chemical reagents depend on imports from the other side of the world. And many people who are ill, self-isolating, or suddenly unemployed depend on the kindness of neighbors, friends, and strangers to get by.
The sudden stop to economic activity underscores a truth about the modern, interconnected economy: what affects some parts substantially affects the whole. This web of linkages is therefore a vulnerability when disrupted. But it is also a strength, because it shows once again how the division of labor makes everyone better off, exactly as Adam Smith pointed out over two centuries ago.
Today’s transformative digital technologies are dramatically increasing such social spillovers, and not only because they underpin sophisticated logistics networks and just-in-time supply chains. The very nature of the digital economy means that each of our individual choices will affect many other people.
Consider the question of data, which has become even more salient today because of the policy debate about whether digital contact-tracing apps can help the economy to emerge from lockdown faster.
This approach will be effective only if a high enough proportion of the population uses the same app and shares the data it gathers. And, as the Ada Lovelace Institute points out in a thoughtful report, that will depend on whether people regard the app as trustworthy and are sure that using it will help them. No app will be effective if people are unwilling to provide “their” data to governments rolling out the system. If I decide to withhold information about my movements and contacts, this would adversely affect everyone.
Yet, while much information certainly should remain private, data about individuals is only rarely “personal,” in the sense that it is only about them. Indeed, very little data with useful information content concerns a single individual; it is the context – whether population data, location, or the activities of others – that gives it value.
Most commentators recognize that privacy and trust must be balanced with the need to fill the huge gaps in our knowledge about COVID-19. But the balance is tipping toward the latter. In the current circumstances, the collective goal outweighs individual preferences.
But the current emergency is only an acute symptom of increasing interdependence. Underlying it is the steady shift from an economy in which the classical assumptions of diminishing or constant returns to scale hold true to one in which there are increasing returns to scale almost everywhere.
In the conventional framework, adding a unit of input (capital and labor) produces a smaller or (at best) the same increment to output. For an economy based on agriculture and manufacturing, this was a reasonable assumption.
But much of today’s economy is characterized by increasing returns, with bigger firms doing ever better. The network effects that drive the growth of digital platforms are one example of this. And because most sectors of the economy have high upfront costs, bigger producers face lower unit costs.
One important source of increasing returns is the extensive experience-based know-how needed in high-value activities such as software design, architecture, and advanced manufacturing. Such returns not only favor incumbents, but also mean that choices by individual producers and consumers have spillover effects on others.
The pervasiveness of increasing returns to scale, and spillovers more generally, has been surprisingly slow to influence policy choices, even though economists have been focusing on the phenomenon for many years now. The COVID-19 pandemic may make it harder to ignore.
Just as a spider’s web crumples when a few strands are broken, so the pandemic has highlighted the risks arising from our economic interdependence. And now California and Georgia, Germany and Italy, and China and the United States need each other to recover and rebuild. No one should waste time yearning for an unsustainable fantasy.