The surprising unemployment rate

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Good afternoon,

Economists are still scratching their heads over the 13.2 percent unemployment rate in May. Estimates were calling for an unemployment rate of up to 20 percent.

The national jobs figure comes out about 10 days before statewide numbers. Delaware reported a 14.3 percent unemployment rate for April, slightly below the national average for the month, but well above Maryland’s 9.9 figure.

The stock market loved the latest news and the rally continued into Monday.

Meanwhile, there were dark hints that the Trump administration had tweaked the numbers. Similar charges were levied against the Obama administration when jobless numbers improved beyond the expectations of Republican critics.

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People close to the U.S. Bureau of Labor Statistics say it is nearly impossible to fudge the numbers.

The report is kept in a locked vault inside an alligator filled moat. That’s not exactly true, but even the director of the bureau does not receive an early copy.

Over the weekend, explanations abounded on reasons for the good news.

We do know it is hard to keep tabs on data during an earthshaking event like a pandemic.

The Washington Post (paywall) pointed to one factor  – an abnormally high number of people absent from work “for other reasons.”  If that figure needs to be revised, the jobless rate would be above 16 percent.

Another possibility is  the Payroll Protection Program which forgives loans for smaller  companies that keep staff produced a fleeting  “sugar high.”

At the last report, PPP pumped $1.4 billion into the economy of Delaware, a state with fewer than a million people. 

A PPP loan can be fully forgiven if employees are kept on the payroll for eight weeks. That means its benefits to the economy will lessen during the summer. 

Also expiring at the end of July are added unemployment benefits under the CARES Act that run $600 a week, When combined with state benefits, some on the job sidelines  may have seen a temporary increase in income.

The hope is that the lower unemployment rate will make businesses feel more confident about rolling the dice and keeping workers, even if conditions are on the soft side. 

Enjoy this beautiful Monday and as always thanks for your support.

 Your explanations for Friday’s job figures are also welcome. Simply hit reply and type away. None of our messages go to a “dead letter office” we see with some newsletters. – Doug Rainey, chief content officer.

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