End of the Beginning - Part 3

As we noted yesterday - and earlier - there are signs from the unemployment insurance data that there is a bottoming out of the coronavirus-related recession. If no one had been finding jobs, then the insured unemployed would be the sum of all recent new weekly claims. But that hasn't been happening. So there are signs of job creation, not just loss.

Now the separate surveys of the labor market - the Current Population Survey which produces the unemployment rate - and a separate survey of nonfarm payroll employment are also indicating a bottoming out. The (high) unemployment rate fell somewhat in May. Payroll employment rose. There are methodological problems in data collection that arise under current circumstances. We do not have separate data yet for California so it might show contrary moves compared to the U.S. as a whole.

However, the California economy is linked to the larger U.S. economy. The latest data come as the legislature and governor are at odds over the state budget - with the latter taking a more cautious and austere position. The new data, even though they could easily be reversed, are likely to strengthen the hand of the legislature.

The situation is still very fragile. A second wave of coronavirus outbreaks could occur, possibly due in part to the large demonstrations as well as to areas of the country that did not shutdown or opened early. The political situation is uncertain. A former prime minister of Britain was asked by a reporter after he stepped down what his biggest challenge had been. The answer was "events."

The latest unemployment and payroll data are at:
https://www.bls.gov/news.release/empsit.nr0.htm.