US Jobless Claims Soar to Over 6 Million As Labor Market Rout Continues

Tom Ozimek
By Tom Ozimek
April 9, 2020Business News
US Jobless Claims Soar to Over 6 Million As Labor Market Rout Continues
Visitors to the New York State Department of Labor are turned away at the door by personnel due to closures over CCP virus concerns in New York, on March 18, 2020. (John Minchillo/AP Photo)

Jobless claims filed in the United States soared to a near-record high of more than 6 million for the week ending April 4, as CCP virus-related lockdowns and closures continued to 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 and is the most timely data on economic health, surged to 6,606,000, a slight drop of 261,000 from the previous week’s revised level, the Department of Labor figures show (pdf).

The previous week’s figures were revised up by 219,000 from 6,648,000 to 6,867,000.

Economists polled by Reuters said they expected weekly jobless claims for the week ended April 4 to come it at 5.25 million, while some estimates were as high as 9.295 million.

“These dismal numbers suggest another record-breaking April jobs report,” said Beth Ann Bovino, chief U.S. economist at S&P Global Ratings in New York.

“America is now in recession and as it appears to deepen, the question is how long it will it take before the U.S. recovers,” Bovino said.

Thursday’s jobless figures are a near-historic high for weekly unemployment claims in the United States, amounting to almost 10 times the pre-COVID-19 crisis record of 695,000, set in 1982. The new claims bring the number of Americans seeking unemployment benefits in the last three weeks to over 15 million.

The Department of Labor blamed the spike in unemployment on the pandemic.

“The COVID-19 virus continues to impact the number of initial claims and its impact is also reflected in the increasing levels of insured unemployment,” the agency said.

jobless claim
Unionized hospitality workers wait in line in a basement garage to apply for unemployment benefits at the Hospitality Training Academy in Los Angeles on March 13, 2020. (Marcio Jose Sanchez/AP Photo)

The preliminary unemployment rate was 5.1 percent for the week ending March 28, an increase of 3.0 percentage points from the previous week’s unrevised rate, the agency said.

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 95 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.

NTD Photo
A doctor speaks with a homeless man in San Francisco, California, on March 17, 2020. (Josh Edelson/AFP/Getty Images)

The $2.2 trillion emergency relief bill signed into law by President Donald Trump on March 27 gives states more flexibility to extend unemployment compensation.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act expands states’ ability to provide unemployment insurance for many workers impacted by the COVID-19 pandemic, including for workers who are not ordinarily eligible for unemployment benefits like independent contractors.

Still, many economists believe there is still more downside for the labor market.

“The labor market has entered a traumatic period,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York. “We foresee the unemployment rate spiking to 14 percent in April.”

‘Not in Free Fall’

Speaking on Face the Nation on Sunday, St. Louis Federal Reserve President James Bullard said he did not believe the U.S. economy or jobs market was in “free fall” amid the epidemic.

“We’re asking people to stay home to invest in national health,” Bullard said, adding, “The uptake on the unemployment insurance program is a good thing because it means you’re getting the transfers to the people that are being disrupted by this health-ordered shutdown.”

The Fed’s St. Louis district in late March estimated that some 47 million Americans could lose their jobs as a result of the virus-driven economic fallout, which would bring the rate to around 32 percent.

Bullard told Bloomberg radio on March 30 that he expected unemployment within a range of between 10 and 42 percent, adding that he expected the economy to rebound sharply after the virus is defeated.

A recent Goldman Sachs forecast 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,” analysts at a Washington-based think tank said of Goldman’s figures, adding their own 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.

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.

Both Bank of America and Goldman Sachs expect a sharp rebound after the pandemic subsides in the United States.

Ivan Pentchoukov and The Associated Press contributed to this report.

From The Epoch Times

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