by Greg Grootendorst, Chief Economist and Katherine Rainone, Regional Economist
For the feature article in our monthly economic report at the very start of the COVID-19 pandemic, we reported on the unprecedented number of weekly initial unemployment claims in the U.S. – which was nearly 3.5 million for the week ending March 21. Since then, the weekly initial and continued unemployment claims statistics have been one of the most reliable and frequently available indicators to help make sense of the impact of COVID-19 on the economy of Hampton Roads.
According to the Virginia Employment Commission (VEC), for the week ending August 15, 2020, continued unemployment claims picked up in Hampton Roads after five straight weeks of steady declines, while initial claims also rose after two weeks of declines. This increase was mirrored across the rest of the Commonwealth for both continued and initial claims, as well as for initial claims nationally. This increase in initial unemployment claims in Hampton Roads followed a steep decline the prior week coinciding with the expiration of the CARES Act, which was providing unemployment recipients with an extra $600 per week in benefits. The weeks ending August 22 and 29 saw initial and continued claims in Hampton Roads trend downward once again, a move in the right direction.
The White House issued an executive order in the beginning of August to extend the additional benefits, but at a lower rate of $400 per week, $300 of which would be federal funding and $100 to be paid by individual states. The federal funding for this extension is to be provided by the Federal Emergency Management Agency’s (FEMA) Disaster Relief Fund at a cost of $44 billion, called the Lost Wages Assistance program. A major difference with this program is that each state has to apply and be approved to receive the funding, and as of August 26, Virginia has been approved by FEMA to receive these extra federal funds, but as of this report it is unclear when Virginians can expect to begin receiving these benefits.
The chart below shows the weekly initial and continued unemployment claims as a percentage of population for both Hampton Roads (purple) and the U.S. (orange) from the middle of March through the end of August. In general, the pattern of the region’s claims mirrors that of the rest of the nation: a steep rise at the start of the pandemic and a gradual decline once businesses were allowed to reopen. Businesses in Virginia began opening slightly later than other states, helping to explain the longer plateau of continued claims in Hampton Roads throughout May and June, and a summer spike in regional cases which led to increased restrictions on bars and restaurants in the 757, which may have contributed to the increase in initial claims throughout July.
Over 53,000 people in Hampton Roads are currently receiving some form of unemployment benefit, which is more than 12 times the number of people receiving benefits in March. This display of volatility indicates definite uncertainty as Hampton Roads begins inching towards recovery.
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To view September’s full economic monthly report, click HERE.
Source: Hampton Roads Planning District Commission, Virginia Employment Commission, U.S. Employment and Training Administration