31,000 regular state unemployment claims filed in Washington last week, down 36% from prior week.

The Employment Security Department reports another sizable drop in unemployment claims.

During the week of May 24-30, there were 31,224 initial regular unemployment claims (down 36% from the prior week) and 774,959 total claims for all unemployment benefit categories (a decrease of 155,423) filed by Washingtonians, according to the Employment Security Department (ESD).  ESD believes the continued decrease is due to a variety of reasons including fraud prevention measures and more people going back to work with the reopening of some industry sectors and regions over the past three weeks.

The table below, from ESD, includes the federal unemployment programs.

Unemployment claim type

For week of

May 24-30

For week of

May 17-23

For week of

May 10-16

Regular Unemployment Insurance (UI) initial claims

31,224

48,445

138,733

Pandemic Unemployment Assistance (PUA) initial claims

12,878

21,250

61,325

Pandemic Emergency Unemployment Compensation (PEUC) initial claims

10,176

19,111

59,630

Continued/ongoing weekly claims

720,681

841,576

1,410,892

Total claims

774,959

930,382

1,670,580

Progress, it seems, but the numbers remain disturbingly high:

A total of 2,045,863 initial claims have been filed during the pandemic (1,280,711 regular unemployment insurance, 409,566 PUA and 355,523 PEUC)

The Seattle Times reports on the magnitude of the fraudulent UI fraud scheme.

Two weeks after revelations of a massive fraud scheme that temporarily shut down Washington’s unemployment system, state officials have acknowledged that criminals may have stolen between $550 million and $650 million.

Of that, the state has recovered $333 million, up from around $300 million reported last week, the state Employment Security Department said Thursday.

Legislative auditor examines how Washington compares with other states on population, economy, health and environment.

A new interactive report from the Joint Legislative Audit and Review Committee takes a close look at how Washington compares with other states. The data helps benchmark the state. And, while it sounds like the kind of thing only data geeks would find interesting, we think most of you will too.  The report examines

JLARC staff prepared this reference guide for Washington legislators to illustrate how Washington compares to other states in five broad areas:

  1. Population size, economy, health, and environment
  2. Government spending and debt
  3. Education costs and spending
  4. Taxes and revenue
  5. Public assistance, transportation, and public safety spending

This report presents information from national datasets. Our intent is to make these public data sources more accessible and interactive.

Here’s a link to the one-page overview. We’ve snipped the section on taxes. 

It’s a nice overview presentation. Note the relatively high rank for state per pupil funding, and middle rankings for higher ed appropriations and in-state tuition. Note also the disparity between per capita taxes as taxes a share of personal income, a reflection of the state’s high per capita personal income ranking (reported in another section of the one-pager as 7th highest in the nation). There’s a lot of good information in the report. 

For those who like to play with data visualization, there’s a very nice interactive Tableau dashboard that provides a wealth of detail.

See also this video overview and print presentation of the report. 

Very well done.

Nationally, 1.9 million unemployment claims filed last week; ADP reports 2.8 million jobs lost in May.

The layoffs continue. The U.S. Department of Labor reports 1.9 million Americans applied for unemployment benefits last week. 

In the week ending May 30, the advance figure for seasonally adjusted initial claims was 1,877,000, a decrease of 249,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 2,123,000 to 2,126,000. The 4-week moving average was 2,284,000, a decrease of 324,750 from the previous week’s revised average. The previous week’s average was revised up by 750 from 2,608,000 to 2,608,750.

The advance seasonally adjusted insured unemployment rate was 14.8 percent for the week ending May 23, an increase of 0.5 percentage point from the previous week’s revised rate.

The Associated Press reports,

The total number of people who are receiving jobless aid rose slightly to 21.5 million, down from a peak of nearly 25 million two weeks ago but still at a historically high level. It shows that scattered rehiring is offsetting only some of the ongoing layoffs with the economy mired in a recession. Thursday’s latest weekly number from the Labor Department is still more than double the record high that prevailed before the viral outbreak.

Still, the number of people who applied for benefits last week marked the ninth straight decline since applications spiked in mid-March. The job market meltdown that was triggered by the coronavirus may have bottomed out as more companies call at least some of their former employees back to work.

This follows yesterday’s ADP report that 2.8 million private sector jobs were lost in may.

Private sector employment decreased by 2,760,000 jobs from April to May according to the May ADP National Employment Report®. The report utilizes data through the 12th of the month. The NER uses the same time period the Bureau of Labor and Statistics uses for their survey. As such, the May NER does not reflect the full impact of COVID-19 on the overall employment situation.

Remarkably, that number amounts to good news, because it’s far fewer job losses than anticipated. At Calculated Risk, Bill McBride writes,

… the consensus forecast [was] for 9,000,000 private sector jobs lost in the ADP report.

From the AP coverage of the ADP report,

Barring a second wave of the outbreak and with some additional government support, Mark Zandi, chief economist at Moody’s Analytics, said the COVID-19 recession appears to have only lasted three months.

“It will be the shortest recession on record, but it will be among the most severe,” Zandi said on a call with reporters.

Short would be good.

Economic forecast: Drop in Washington employment “unprecedented in depth and speed.”

The economic outlook presented yesterday by the Economic and Revenue Forecast Council cannot be said to have contained minty surprises. The ERFC reports that what most of us have experienced and witnessed in the last few months has been something we’ve not seen before and breathtaking in its scope.

The decline in Washington employment in April was unprecedented in its depth and speed. We have four months of new Washington employment data since the February forecast was released. Total nonfarm payroll employment fell 453,000 (seasonally adjusted) in April and 446,200 in the four-month period. The February forecast expected an increase of 27,500 in January, February, March, and April. Private services-providing sectors lost 359,300 jobs in the four-month period. Construction employment declined by 47,200 jobs and manufacturing declined by 27,700 jobs including the loss of 8,300 aerospace jobs. Government payrolls declined by 11,100 jobs in January, February, March, and April.

The good news: A recovery is expected, with employment gains in 2021.

We expect an 11.0% decline in Washington employment this year compared to the 1.8% increase in the February forecast. We expect above-average growth through the remainder of the forecast as the economy recovers from this deep recession. We expect employment growth to average 4.1% per year in 2021 through 2025 compared to the 0.9% average rate expected in February. Our forecast for nominal personal income growth this year is 2.1%, down from 4.7% in the February forecast. The adverse effects of the recession on personal income this year are mitigated by substantial income support through the CARES Act. Our new forecast for nominal personal income growth in 2021 through 2025 averages 3.8% per year, which is down from the 4.7% rate expected in the February forecast. The effect of the recovery on growth in 2021-25 is offset by the loss of CARES Act support.

Cutting to the conclusion:

Much more in the report, which will feed into the June 17 revenue forecast.

Editorials call for June special session to trim state budget. WRC analyzes public employment in last recession.

The pandemic lockdown has plunged the economy into recession. The job losses are enormous. Business face a tough road to recovery. Some won’t make it. And tax revenues to support government services are plummeting. Given all that, The Seattle Times and Walla Walla Union-Bulletin editorial boards have called for a June special legislative session to address the fiscal crisis.

The Seattle Times editorial states,

Washington’s Legislature should convene in a June special session to immediately reduce state spending.

This is painful. Important programs will be trimmed. But with state revenue falling by perhaps $7 billion because of the pandemic-driven economic shutdown, there is simply no choice.

Everything must be on the table as taxpayers across Washington struggle, including reopening state employee contracts to reflect new economic realities. Contracts include a 3% raise for state employees, after a 3% raise last year.

Read the whole thing. The editorial quotes a key legislative leader.

House Speaker Laurie Jinkins, who has experience making difficult cuts in state and local government during earlier downturns, said it well: “What I’ve always seen is, the earlier you act, the less deep your cuts have to be,” the Tacoma Democrat told this editorial board Thursday.

The Walla Walla Union-Bulletin editorial states,

It’s time for reasoned debate on how to reduce state government spending as declining sales tax revenue in the midst of the coronavirus pandemic is busting the budget.

In addition, it’s time for senators and representatives — elected to represent the people — to weigh in on plans continuing reopenning the state from the original lockdown.

The U-B also quotes a key legislative leader.

“The Legislature has been kept on the sidelines for more than two months while the governor exercised emergency powers long past the time when his original goal of ‘flattening the curve’ was realized and hospital resources were not overwhelmed,” said Senate Minority Leader Mark Schoesler, R-Ritzville, in a statement Thursday. “… It is time for the legislative branch to intervene.”

The June 17 revenue forecast will provide a better indication of the severity of the problem.

Meanwhile, Congress remains divided on the size or timing of another financial aid package. The Associated Press reports,

The House’s staggering $3 trillion package is mothballed in the Senate, but Republicans are focused instead on ending the pandemic’s stay-home economy by trimming unemployment benefits to push some of 41 million suddenly jobless Americans back to work when jobs return…

Deadlines are fast approaching. Most states have budget deadlines with the new fiscal year starting July 1.

Governing magazine reports,

State and local officials are well aware that they face the most dire fiscal circumstances in decades. They still don’t know just how bad it will be.

Governing reporter Alan Greenblatt writes, 

Most forecasters are projecting a sharp uptick in economic growth this summer, following the coronavirus-induced cliff, but no one can be sure of the size of the possible rebound. Another round of federal aid may come, but there’s no guarantee at this point.

All that adds up to spending cuts. Already, nearly 1 million state and local jobs have been lost.

A new analysis from the Washington Research Council reports on job losses and compensation reductions in state government in the Great Recession,

During the Great Recession, the state negotiated pay cuts for state employees. Additionally, state and K–12 employees lost jobs. Post-recession, the number of both K–12 employees and state employees funded by the operating budget rebounded. On a per capita basis, the numbers of state employees funded by the operating and capital budgets have not recovered. But K–12 employment is up in the post-recession period even when considered on a per-pupil basis.

Read the brief analysis for important detail. As Speaker Jinkins stated, the sooner you make the necessary adjustments, the better.

Preliminary economic forecast for Washington projects real GDP to fall 5.8% in 2020; grow again in 2021.

The Economic and Revenue Forecast Council has released its preliminary economic forecast. It’s the first economic forecast to capture the pandemic recession. There’s a lot of good information in the report. We’ll highlight just a few points.

We have adjusted real gross domestic product (GDP) to match the Blue Chip “Consensus” GDP forecast for 2020 and 2021. We now expect Real GDP to decline 5.8% in 2020 followed by a 4.0% increase in 2021. In February we expected GDP to grow 1.9% in 2020 and 2.0% in 2021.

The impact of federal assistance is clear in the personal income numbers.

We expect an 11.0% decline in Washington employment this year compared to the 1.8% increase in the February forecast. We expect above-average growth through the remainder of the forecast as the economy recovers from this deep recession. We expect employment growth to average 4.1% per year in 2021 through 2025 compared to the 0.9% average rate expected in February. Our forecast for nominal personal income growth this year is 2.1%, down from 4.7% in the February forecast. The adverse effects of the recession on personal income this year are mitigated by substantial income support through the CARES Act. Our new forecast for nominal personal income growth in 2021 through 2025 averages 3.8% per year, which is down from the 4.7% rate expected in the February forecast. The effect of the recovery on growth in 2021-25 is offset by the loss of CARES Act support.

This forecast sets the stage for the June official revenue forecast.

U.S. personal income up, consumer spending down.

The Bureau of Economic Analysis today released personal income and outlays data for April. The memo states,

Personal income increased $1.97 trillion (10.5 percent) in April according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $2.13 trillion (12.9 percent) and personal consumption expenditures(PCE) decreased $1.89 trillion (13.6 percent).

Real DPI increased 13.4 percent in April and Real PCE decreased 13.2 percent (tables 5 and 7). The PCE price index decreased 0.5 percent (table 9). Excluding food and energy, the PCE price index decreased 0.4 percent.

The BEA reports federal aid provided much of the lift in personal income.

The increase in personal income in April primarily reflected an increase in government social benefits to persons as payments were made to individuals from federal economic recovery programs in response to the COVID-19 pandemic.

And the lockdown contributed to the spending reduction.

The $1,662.1 billion decrease in real PCE in April reflected a $758.3 billion decrease in spending for goods and a $943.3 billion decrease in spending for services (table 7). Within goods, decreases in all subcomponents were led by a decrease in food and beverages. Within services, the largest contributors to the decrease were spending for health care as well as food services and accommodations.

Calculate Risk reports,

The increase in personal income was way above expectations,  and the decrease in PCE was below expectations.

The Associated Press reports the extraordinary magnitude of the spending drop.

U.S. consumer spending plunged by a record-shattering 13.6% in April as the viral pandemic shuttered businesses, forced millions of layoffs and sent the economy into a deep recession.

Last month’s spending decline was far worse than the revised 6.9% drop in March, which itself had set a record for the steepest one-month fall in records dating to 1959. Friday’s Commerce Department figures reinforced evidence that the economy is gripped by the worst downturn in decades, with consumers unable or too anxious to spend much.

More bad news may show up next month.

The depth of the spending drop is particularly damaging because consumer spending is the primary driver of the economy, accounting for about 70% of economic activity. Last month’s figure signaled that the April-June quarter will be especially grim, with the economy thought to be shrinking at an annual rate near 40%. That would be, by far, the worst quarterly contraction on record.

Further, the Commerce Department reported Thursday that the U.S. economy shrank 5% in Q1.

The U.S. economy shrank at an even faster pace than initially estimated in the first three months of this year with economists continuing to expect a far worse outcome in the current April-June quarter.

The Commerce Department reported Thursday that the gross domestic product, the broadest measure of economic health, fell at an annual rate of 5% in the first quarter, a bigger decline than the 4.8% drop first estimated a month ago.

It was the biggest quarterly decline since an 8.4% fall in the fourth quarter of 2008 during the depths of the financial crisis.

A bleak end to the week.

Washington reports 48,445 initial regular unemployment claims last week, a 65% drop from prior week.

The Employment Security Department reports a large drop in initial regular unemployment claims, a drop they associate with fraud prevention measures.

During the week of May 17-23, there were 48,445 initial regular unemployment claims, down 65% from the prior week and 1,497,591 total claims for all unemployment benefit categories filed by Washingtonians, according to the Employment Security Department (ESD). ESD believes the decrease was in large part due to significant fraud prevention measures that were put in place over the past two weeks.

The numbers are still shocking.

Since the week ending March 7 when COVID-19 job losses began:

  • A total of 1,996,257 initial claims have been filed during the pandemic (1,252,608 regular unemployment insurance, 397,845 PUA and 345,804 PEUC)
  • A total of 1,130,519 distinct individuals have filed for unemployment benefits
  • ESD has paid out nearly $4.7 billion in benefits
  • 807,071 individuals who have filed an initial claim have been paid

The ESD commissioner also reports success in recovering and stopping fraudulent payments.

“Our priorities from day one of this crisis have been to get benefits out to Washingtonians who need them quickly and expand eligibility so those impacted can get the help they need,” said ESD Commissioner Suzi LeVine. “In recent weeks, at the same time we have taken aggressive measures to tackle the increase of imposter fraud in our system, we have stayed laser-focused on helping every Washingtonian with a valid claim get the benefits they deserve. Meanwhile, our team continues to work with federal law enforcement to go after the criminals perpetrating the fraud, help the victims and recoup the money. The dramatic decline in initial claims this week is a strong signal that the additional steps we are taking to address imposter fraud are working. We’ve already recovered and stopped the payments of hundreds of millions of dollars in fraudulent claims in the past two weeks, and we will continue to reclaim every dollar we can.”

The April map of county unemployment rates tells a sobering story of double-digit rates.