The numbers: Some 3.8 million American workers who just lost their jobs applied last week for unemployment benefits, bringing a record number of layoffs during the coronavirus crisis to about 30 million in a month and a half.
The weekly pace of layoffs has slowed since peaking at 6.9 million at the end of March, but millions more are still expected to apply in the next several weeks. And many are still waiting for states to process and approve their claims.
The unprecedented surge in layoffs as business shutdown to combat the coronavirus pandemic has pushed the unemployment rate to the highest levels since the Great Depression of the 1930s. Pinning down the true level of unemployment isn’t easy, but senior economist Sal Guatieri of BMO Capital Markets points out that about 19% of the pre-crisis labor force has applied for benefits.
The official jobless rate will be released next week with the Labor Department’s employment report for April.
What happened: Last week, the states of Florida, Georgia, California, Texas and New York reported the biggest increases in new claims, according to the Labor Department.
The stunningly large number of job losses each week appears to be winding down, but the damage has been deep and widespread.
The number of people collecting unemployment benefits, known as continuing claims, jumped to 18 million as of April 18. These figures are reported with a two-week lag.
Just a few months ago, new jobless claims were in the low 200,000s and stood near a 50-year low. Only about 1.7 million Americans were collecting benefits. And the unemployment rate was at a half-century low of 3.5%.
It’s important to note that the government’s figures for jobless claims are adjusted for seasonal variations. The actual number of new claims filed since the pandemic began is somewhat smaller at nearly 28 million.
What’s more, some of the people who previously applied for benefits may have been called back to work or put back on payrolls as a result of the government’s special aid package for small businesses that keep paying their employees.
The big picture: The federal government has boosted aid and loosened eligibility standards to help more Americans whose finances have been crushed by widespread business closures and stay-at-home orders.
The extra money will help the economy from collapsing entirely, but the U.S. is headed for a deep recession that’s likely to last through the early summer. The economy could start to recover in several months, but how quickly it snaps back will depend on the government’s success in squelching the spread of the coronavirus.
What they are saying? “Claims may continue to fall over coming weeks but will likely remain high as businesses remain closed and have no choice but to continue to reduce or furlough their workforce,” said Rubeela Farooqi, Chief U.S. economist at High Frequency Economics.
Originally Published on MarketWatch