As unemployment rises and personal income and consumption plummet, Gov. Inslee is set to announce his plans for reopening more of the state economy. Earlier this week, we reported on the coalition of West Coast employer groups that has offered its assistance to governors on reopening strategies and on the Washington Roundtable and Challenge Seattle recommendations to help guide businesses as the economy unlocks.
First, though, a look at new economic data.
Nearly 146,000 new unemployment insurance claims were filed last week in Washington. Paul Roberts reports in The Seattle Times,
For the week ending April 25, the state received 145,757 initial claims for unemployment insurance, up nearly 75% from the number of claims received the prior week, according to figures released Thursday morning by the U.S. Department of Labor.
Nationally, another 3.8 million initial UI claims were filed, according to the Department of Labor.
In the week ending April 25, the advance figure for seasonally adjusted initial claims was 3,839,000, a decrease of 603,000 from the previous week’s revised level. The previous week’s level was revised up by 15,000 from 4,427,000 to 4,442,000. The 4-week moving average was 5,033,250, a decrease of 757,000 from the previous week’s revised average. The previous week’s average was revised up by 3,750 from 5,786,500 to 5,790,250.
And, yes, the numbers are staggering.
The advance seasonally adjusted insured unemployment rate was 12.4 percent for the week ending April 18, an increase of 1.5 percentage points from the previous week’s revised rate. This marks the highest level of the seasonally adjusted insured unemployment rate in the history of the seasonally adjusted series.
At Calculated Risk, Bill McBride provides this perspective.
At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.
Continued claims have already increased to a new record high of 17.992 million (SA) and will increase further over the next few weeks – and likely stay at that high level until the crisis abates.
The Bureau of Economic Analysis also reports personal income and spending fell sharply in March.
Personal income decreased $382.1 billion (2.0 percent) in March according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) decreased $334.6 billion (2.0 percent) and personal consumption expenditures(PCE) decreased $1,127.3 billion (7.5 percent).
Real DPI decreased 1.7 percent in March and Real PCE decreased 7.3 percent (tables 5 and 7). The PCE price index decreased 0.3 percent. Excluding food and energy, the PCE price index decreased 0.1 percent (table 9).
The New York Times reports the economic toll has not yet hit bottom.
There is much worse to come. Widespread layoffs and business closings didn’t hit until late March in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully, to show that GDP contracted at an annual rate of 30% or more, a scale not seen since the Great Depression.
“They’re going to be the worst in our lifetime,” Dan North, chief economist for the credit insurance company Euler Hermes North America, said of the second-quarter figures. “They’re going to be the worst in the post-World War II era.”
State and national leaders continue to assess how the economy can be restarted without adverse consequences for public health. The Trump administration has decided not to extend federal social distancing guidelines that expire today. The federal policies, however, are much less consequential than those adopted by state and, in some instances, local governments.
Gov. Inslee will extend his stay-at-home order, reports The Seattle Times, and outline his steps for reopening the economy.
The governor said on Wednesday that public health data is leading him to extend the order, which has closed thousands of businesses and limited large gatherings for more than a month.
That order was scheduled to lift at the end of the day on May 4, though Inslee and state officials have been saying an extension was likely.
“And we will have more details Friday about the phased-in approach about how we will open our economy in a safe way,” Inslee said.
Times reporter Joseph O’Sullivan writes that the governor is relying on public health data to guide his decisions.
That data, he said, covers five broad areas: COVID-19 disease activity; the readiness of the health care system; the availability of testing; the capacity for contact tracing after people have been infected; and the risk to vulnerable populations.
The governor shared graphics of, among other figures, the daily number of new cases of COVID-19, the illness caused by the coronavirus; the reproduction rate of infections in King County; and measurements relating to hospitalizations and health care capacity.
[The presentation can be found online at: www.governor.wa.gov/sites/default/files/4_29_DataVisualizations.pdf]
There’s no magic set of metrics to determine the policy response. Rather,
The governor said he was looking at combinations of the numbers to see if there were broad indicators that the outbreak is slowing.