Pennsylvania Trust

Unemployment Recap

Unemployment Recap

The number released this morning is obviously terrible as our economy is dependent on the consumer. What makes this number specifically bad is the magnitude and swiftness of the decline. On a positive side, not reflected in the numbers is the fact unemployment benefits have helped cushion the actual wealth effect of those laid off. It will be months (maybe years) before we can properly assess the consequences of Federal relief which included these unemployment benefits.

The number was actually a bit “less bad” when you look at the expectations. I think this was due to two reasons:

  1. There were five weeks of initial unemployment claims in April but the payroll data only encapsulates four weeks of actual data. (Claims picked up some of March’s decline.)
  2. Hiring in April did not drop to zero — grocery stores, delivery firms and the Amazon economy were hiring — so some of the people who filed initial jobless claims likely found new positions and will be a wash in the payroll numbers.

Finally, note that the collapse in payrolls triggered an astonishing spike in hourly earnings, because the data is not adjusted, and most of the job losses last month were in relatively low wage sectors… Average hourly earnings across the whole economy were $28.62 in March, but retail jobs paid an average of $20.26 and leisure and hospitality paid $16.83.

Expected Actual March December
Change in Nonfarm Payrolls


20.5mm -701k


Unemployment Rate


14.70% 4.40%


Underemployment Rate


22.80% 8.70%


Average Hourly Earnings MoM


4.70% 0.50%


Labor Force Participation Rate


60.2 62.70%


Data from the Bureau of Labor Statistics

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