In mid-April, as coronavirus lockdowns were starting to throttle business activity, a pair of economists with the Federal Reserve Bank of New York wrote in a blog post that the pandemic’s economic fallout was likely to resemble the impact of a severe natural disaster versus a longer-lasting recession.
Analysts, they wrote, should “think twice about assuming that every jobless claim translates into a net job loss.”
They were right—up to a point. Weekly reports on initial claims for unemployment benefits, an early measurement of the pandemic’s economic impact that spiked in late March and early April, appeared to signal a jump in joblessness here that might top 20 percent. However, the monthly unemployment rate peaked at 15 percent in April, then began a fairly steady decline, dropping below 7 percent in September.
Yet nearly 10 months after COVID-19 started to disrupt life in this region, initial jobless claims remain elevated compared to year-ago levels. And like new daily infections, which began to surge again two months ago, first-time claims in recent weeks have turned upward.
In the week ended Dec. 19, initial claims totaled 2,526, double the number filed in the same week a year ago. By comparison, in the third week of November, the initial claims tally was only a third higher than the year-ago level.
From the week ended March 14 through Dec. 19, the Finger Lakes region has recorded 230,347 initial claims, compared with 40,689 in the same period a year earlier—an increase of 189,658 or 466 percent.
The Rochester-area trend follows the data for the nation as a whole. Weekly initial claims were headed downward through early November, but then reversed course as the COVID-19 surge forced officials to reinstate some lockdown rules that had been lifted after the spring outbreak ebbed. The four-week moving average was 818,250, an increase of 4,000 from the previous week’s revised average, the U.S. Department of Labor reported. The higher numbers, economists say, are a worrisome—though not unexpected—signal of a difficult winter ahead.
U.S. Initial Unemployment Claims
Other signs of economic deterioration are evident in the Rochester region and elsewhere. At the same time, two developments could help stabilize the economy and, eventually, fuel a sustained recovery.
One is President Donald Trump’s weekend decision to sign a new, $900 billion package of pandemic relief that includes $600 direct payments to most Americans along with expanded and extended unemployment benefits. The measure also restarts the Paycheck Protection Program that until several months ago helped small businesses keep employees on their payrolls.
The second piece of good news is the arrival of two highly effective COVID-19 vaccines, one from Pfizer and its German partner, BioNTech, and the other developed by U.S-based Moderna. Economists have said the economy cannot regain a firm footing until the virus has been brought under control.
With a jump in third-quarter gross domestic product, the coronavirus downturn technically was shorter than most recessions, which in the post-World War II era have averaged 11 months. Even so, the economic damage is likely to remain much longer.
Paul Ericson is Rochester Beacon executive editor.