A Preview of This Week's UI Claims Data
When and Where Layoffs Will Show Up
TL;DR: Layoffs and unemployment caused by government cutbacks should become more apparent in this week’s jobless claims data, but you’ll have to scrutinize the details more than usual to get a clue about what’s going on.
The rest of this piece is split into 2 pieces:
Layoffs & unemployment of federal government employees
2nd order layoffs & unemployment
More below chart.
1. Layoffs & Unemployment of Federal Government Employees
When we look at the weekly jobs report press release, we normally focus on data from the “regular state programs” - the line items highlighted yellow in the table below. But federal government employees don’t qualify for those programs, and therefore are not included in their totals.
Instead, when laid off, federal employees qualify for a separate program (Unemployment Compensation for Federal Employments, or UCFE) that is highlighted green in the table below. As you can see, the data is published with a week’s lag relative to the state data - on Thursday the 27th at 830 AM ET, we get initial UCFE claims for the week ended February 15th and continuing UCFE claims for the week ended February 8th.
The large scale layoffs of probationary workers started the week ending the 15th, so it’s possible we’ll see initial UCFE claims (but not continuing UCFE claims) pop with Thursday’s release. But I suspect the effect will get bigger the week ended the 22nd.
2. 2nd Order Layoffs & Unemployment
Government cutbacks could affect regular state programs, too, through several channels:
Private sector contractors laid off by the federal government
Private sector and state/local government entities whose budgets depend on federal money
Private sector entities that sell goods and services to government employees
These effects are going to be harder to disentangle, particularly in the aggregated national numbers. But they may be more noticeable in individual states. For example, DC has seen a very substantial increase in initial claims since January - maybe reflecting cutbacks that aren’t layoffs of federal government employees, maybe reflecting just the usual turnover of administrations. Effects on the other 4 jurisdictions I chose - after DC, the biggest epicenters for government employees - have not shown a clear increase. Though if you squint at Maryland and Virginia, maybe… I suspect that, within a few months, all the lines in this chart will be headed clearly upward.
For what it’s worth, here’s a list of the states and jurisdictions with the highest and lowest exposures to federal government employees. When we think of regional recessions resulting from federal government employees, the Greater DC area (DC, MD, VA, WV) is high on the list but not the only place to worry about:
