While initial claims for both the regular Unemployment Insurance Program and the new Pandemic Unemployment Assistance (PUA) program for the self-employed largely stabilized in the rest of the country, the numbers for California continued rising to a new peak since the initial surge in late March.

Within California, initial claims for the regular program rose 8.2% to 237,516, and initial PUA claims rose 6.7% to 433,020, exceeding the regular program for the second week in a row. Nationally, the reported seasonally adjusted regular program claims were stable at 884,000, and the more relevant unadjusted numbers grew 2.4% to 857,148 primarily due to the California rise. National PUA claims rose 12.2%, with about a third of the increase coming from California.

For the US other than California, the current second wave of layoffs at least appears to have leveled off since the beginning of August if even at a higher rate compared to historic norms. In California, this second wave over the past three weeks appears to be leading to a deterioration of the economic situation. The state job and labor force August numbers due out next week consequently are likely to substantially underestimate the state’s current economic conditions, as they will rely on surveys done the week of August 12, a period when California appeared to be stabilizing along with the rest of the country.

In a reversal of the situation throughout most of the current crisis, the rise in initial claims is now being driven more by the PUA program both within California and the US as a whole, even after considering the double-counting for PUA in some states. While concerns are rising that these high numbers are the result of fraud or the outcome of EDD’s efforts to cope with the massive upsurge in their workload, it is uncertain how much of these numbers are the result of EDD catching up on its 1 million claims backlog.  This week’s report from the Department of Labor in fact notes that the California numbers were the result of an estimate from the state rather than an actual count.  A perhaps more applicable factor is that the recent PUA spike began towards the end of the legislative session as it became apparent which occupations and jobs would be given a reprieve from last year’s AB 5. Unlike the other states, California continues to eliminate income opportunities in the current crisis.