Economic Impact of the Coronavirus -- State Unemployment Claims and Gains UPDATED

In addition to the medical and humanitarian aspects of the Coronavirus, the economic impact is momentous, unlike anything seen in our lifetimes. As of the end of February, less than 6 million of the U.S. total 164 million workforce were unemployed. That has exponentially exploded to more than 26 million today -- with no slowing in the upward trajectory in sight. This equates to an approximate 16 percent unemployment rate today. Unfortunately, this is just the midway point to a forecast 32 percent unemployment rate for Q2 2020 made by the St Louis Federal Reserve. Just months ago the country’s unemployment rate was at a 50-year low of 3.5 percent.

Just as with the virus, these economic impacts are not uniform across the country. As usual I invoke the TINSTAANREM axiom — There Is No Such Thing As A National Real Estate Market.Some states have been hard hit while others were hardly impacted.

To gauge the economic impact, USA Today compared the number of first-time unemployment applications for each state from the four weeks ending March 21, 2020 through the week ending April 11, 2020. Unemployment claims were calculated using non-seasonally adjusted data from the Bureau of Labor Statistics. The four-week total of unemployment applications was then divided by the workforce estimate for each state as of the end of February 2020 (pre-Coronavirus). The following table shows the greatest incurred new unemployment resulting from the Coronavirus in the past four weeks. Hawaii saw more than one-in-every-five people (21.7 percent) in the workforce apply for unemployment benefits in the past four week.

The next table shows the 10 states having the smallest increase in Coronavirus-driven unemployment applications. Hawaii (21.7 percent), posting the largest increase in unemployment benefits applications, was 4.4 times greater than the South Dakota unemployment gain – the lowest at 4.9 percent.

Leisure and Hospitality is not the exclusive factor correlated to the increase in unemployment benefits. The next table shows the percentage of all jobs and the total number of jobs in the Leisure & Hospitality sector based on employment data as of the end of February 2020. Florida, with 14.1 percent Leisure & Hospitality Sector jobs, saw just a 6.2 percent increase in unemployment in the past four weeks, third lowest in the country.

The data for all 50 states and the District of Columbia are shown in the next table.

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Unfortunately, the economy will continue to degrade until businesses reopen and activity spools up. How that is to be achieved is yet defined, adding to the uncertainty as to when unemployment claims will peak.