Henry Thomson assesses the upheavals of the past two weeks from inside the United States, pointing out that sharply rising joblessness may be easing and may help quell some of the frustration. But COVID-19 isn't going away

What a remarkable two weeks in America. As I wrote my last column on May 26, the country was beginning to learn of the tragic death of George Floyd in South Minneapolis the day before. Protests in response to Floyd’s death in that city soon escalated and spread across the country, leading to dramatic scenes that have been beamed around the world.

In Arizona, the first protest marches to the State Capitol in downtown Phoenix on May 28 and 29 led to clashes with police and broken windows. More consequential was the looting of the high-end Scottsdale Fashion Square mall that Saturday evening. Local TV news helicopters showed live footage of shops such as the Apple Store, Urban Outfitters and the homewares vendor Crate & Barrel being raided at the shopping center, about 15 miles north of the State Capitol. This prompted Governor Ducey to mobilise the national guard and enforce a state-wide 8pm-5am curfew the next day, lasting for a week. Since then, protests and demonstrations have continued, but looting has not, and the former seem to be concluding, in Phoenix at least.

Most Americans have been appalled by Floyd’s death and alarmed by the looting, arson and violence that accompanied the legitimate protests in its wake. Commentators like Paul Krugman at the New York Times, David Kilcullen in the Australian, and Chris Trotter here at interest.co.nz all expressed dismay at the upheaval in American cities. They asked whether this was the beginning of the end of American democracy, the harbinger of broader organised violence and civil war, or a signal that America is now a malignant force in international affairs, ruled by “its worst demons” and to be shunned by a small, principled Pacific nation like New Zealand.

In the Australian Financial Review last weekend, I made my modest contribution to this discussion, which I will not recant in full here. To summarise, I do not share the direst interpretations of recent events. Urban unrest like that which we have witnessed is very rare in the US, and is much more common in Europe, for example. The recent wave of unrest is likely to ebb but could continue as part of a broader campaign of mobilization through the summer. This is particularly likely if the focus of protests shifts from the specific grievance of Floyd’s death to mobilising voters in the November elections. Mobilisation is likely to be more widespread and contentious if Donald Trump continues to be seen as a threat to the integrity of the electoral process, and especially if we see a very close or contested presidential election result.

Alongside these events, data were released late last week indicating that the US economy had added 2.5 million jobs in May, the most in a single month since statistics have been collected, to send the unemployment rate down from 14.7% to 13.3%. Although Paul Krugman did not want believe the officials at the Bureau of Labor Statistics were telling the truth, this news was a rare splash of positive news – alongside the successful SpaceX rocket launch – and on Monday led to a surge in the US stock market.

In Arizona, the unemployment rate in April was 12.9%, up from 6.1% in March and 4.4% in February. State-level data for May are not available yet, but although first-time unemployment claims are dropping, they are still running at more than six times pre-Covid levels. It appears that the local economy is still shedding jobs, though at a much-reduced pace.

In New Zealand, unemployment statistics are only reported quarterly, and the figure for the March quarter was 4.2%. Higher-frequency indicators such as latest data on welfare benefits show an increase of just over 50,000 “main benefit” recipients since March 20. The latest data on the government wage subsidy program that began on March 17 indicate that 390,000 businesses are receiving this support.

It is not possible to derive precise unemployment estimates for New Zealand from these higher-frequency data. The wage subsidy program, for example, only gives us the number of applications by employers, and allows multiple employers to file claims for the same worker. It is likely that the public will not know the official June quarter unemployment statistics until the end of July.

However, with a working-age population of 3.95 mln we could be pretty certain that the New Zealand unemployment rate was running very much higher at the end of May, assuming (heroically) that each business receiving the wage subsidy corresponds to an average of one unemployed worker. Interestingly, if we assume that half of this (posited) increase in unemployment since mid-March is eliminated by the recent moves to reopen the economy, we see a figure of 9.6%, which is very similar to the Treasury’s estimate of 9.8% last week. However, because the lockdown was only significantly reduced on June 8, the effects of reopening will only become truly apparent in September quarter figures released after the election at the end of October.

As I write, I have the feeling that my next column will return to the topic of the Covid-19 pandemic. Some readers will have noted that Arizona is among several states outside the initially hard-hit Northeast where positive tests for the virus are increasing rapidly. The Governor has repeatedly insisted that this increase is a result of more widespread testing, but nonetheless it is significant. Hospital utilisation rates are also higher, not only because of the virus but also because of a resumption of elective surgeries, which could now be cut short. Other indicators, such as respirator use and Covid-related deaths, are not as negative, so the picture is hardly clear.

The mass response to George Floyd’s death has managed to overshadow the ongoing public health crisis on the front pages, but as Covid-19 begins its march west from New York and Michigan, this could be a temporary change.

Henry Thomson is originally from Amberley, North Canterbury and is now an Assistant Professor of Political Economy at Arizona State University. His research focuses on the political economy of authoritarian rule and transitions to democracy. You can read more about his research here and follow him on Twitter @HenryRThomson. His earlier letters are here.