Jobless claims filed in the United States soared to a record high of more than 6 million for the week ending March 28, as CCP virus-related lockdowns and closures drive deep layoffs.
The number of initial jobless claims filed across the country, which is a measure of the number of Americans filing new unemployment claims, surged to 6,648,000, an increase of 3,341,000 from the previous week’s revised level, the Department of Labor figures show (pdf).
This is a historic high for weekly unemployment claims in the United States, amounting to nearly twice as many as the previous week and almost 10 times the pre-COVID-19 crisis record of 695,000, set in 1982.
The Department of Labor blamed the spike in unemployment on the pandemic.
“The COVID-19 virus continues to impact the number of initial claims. Nearly every state providing comments cited the COVID-19 virus,” the agency said.
But while job losses in accommodation and food services continued to lead the downward slide, the Labor Department said that this week, there was a broader fallout across industries.
“Many states continued to cite the health care and social assistance, and manufacturing industries, while an increasing number of states identified the retail and wholesale trade and construction industries,” the Labor Department wrote.
There was an upward revision of last week’s numbers, which were marked up by 24,000 from 3,283,000 to 3,307,000.
The figures far exceeded the median estimate of 3.50 million in a Reuters survey of economists; some estimates ranged as high as 5.25 million.
Many economists believe there is still more downside for the labor market.
“A rough look at the most affected industries suggests a potential payroll job loss of over 16 million jobs,” said David Kelly, chief global strategist at JPMorgan Funds. “The loss would be enough to boost the unemployment rate from roughly 3.5 percent to 12.5 percent, which would be its highest rate since the Great Depression.”
The mounting economic fallout almost certainly signals the onset of a global recession, with job losses that are likely to dwarf those of the Great Recession more than a decade ago.
Roughly 90 percent of the U.S. population is now under stay-at-home orders, and many factories, restaurants, stores, and other businesses are closed or have seen sales shrivel.
“My anxiety is through the roof right now, not knowing what’s going to happen,” said Laura Wieder, laid off from her job managing a now-closed sports bar in Bellefontaine, Ohio.
Elsewhere around the world, the number of people applying for welfare benefits in Britain increased nearly tenfold to almost 1 million in the past couple of weeks. European unions estimate at least a million on the Continent lost their jobs over the same period, and say the actual number is probably far higher. Spain alone added more than 300,000 to its unemployment rolls in March.
Forecast: 20 Million Jobs May Be Lost by Summer
A Washington-based think tank has made a dire forecast of 20 million jobs lost by summer.
“Our estimate is much larger than was predicted even a week ago, when the forecasting implied 14 million would be furloughed or laid off,” The Economic Policy Institute (EPI) said in an April 1 note that blamed the COVID-19 outbreak for the carnage in labor markets.
“This kind of upending of the labor market in such a short time is unheard of,” said Heidi Shierholz, an economist at EPI.
In their report, EPI analysts cited the latest Goldman Sachs forecast, which predicted a 9 percent slide in gross domestic product (GDP) for the first quarter and a 34 percent plunge in the second quarter.
“This large drop in GDP is consistent with 19.8 million jobs lost by July, bringing unemployment rates across the country into the mid-teens,” the analysts said in the report.
Bank of America analysts forecast similar figures. In a report released on April 2, the analysts project that 16 million to 20 million jobs will be lost within a few months. They expect unemployment to soar to more than 15 percent, worse than the figures during the recession in 2007–2009.
The researchers say the resulting recession “appears to be deeper and more prolonged than we were led to believe just 14 days ago, when we last updated our forecasts, not just in the U.S. but globally as well.”
Both Bank of America and Goldman Sachs expect a sharp rebound after the pandemic subsides in the United States.
Goldman’s dismal prediction follows a Federal Reserve estimate that unemployment in the second quarter would range between around 10 and 42 percent, with a likely jobless rate of around 32 percent.
St. Louis Fed President James Bullard told Bloomberg radio on March 30 that unemployment could continue to grow to between 10 and 42 percent, but should rebound after the virus is defeated.
“We’re expecting the unemployment rate to spike,” Bullard said, noting that the federal relief package will help those who lose their jobs. “But once the virus goes away, we’ll be able to return to normal.
“Hopefully, if this all works smoothly—and there’s a lot in the legislation as well—we’ll be able to come out on the other side and get the economy rocking again.”
Ivan Pentchoukov and The Associated Press contributed to this report.