For the second straight week, millions of new layoffs underscored the staggering toll the coronavirus pandemic is taking on America’s workers.
A record 6.6 million Americans filed first-time jobless claims last week, the Labor Department said Thursday, in a sign the sudden shutdown of a vast swath of U.S. commerce may be just starting to wreak havoc on the economy.
The number of people filing claims the prior week was revised up by a modest 24,000 to 3.3 million. A stunning 10 million workers have sought unemployment benefits in just two weeks, exceeding the nearly nine million who lost jobs from 2008 to 2010 amid the Great Recession.
Economists surveyed by Bloomberg estimated that 3.5 million Americans filed initial claims, which amount to the nation’s most accurate gauge of layoffs and furloughs.
The historic numbers could mark just the initial wave of a punishing couple of months.
Gregory Daco, chief U.S. economist of Oxford Economics, expects a total 22 million job losses by May before the outbreak eases and the economy and labor market begin to revive. The Federal Reserve Bank of St. Louis predicts as many as 47 million layoffs and a mind-boggling 32% unemployment rate, higher than the 25% jobless rate during the Great Depression.
In contrast to other recessions, the job cuts are the result of a calculated halt to economic activity. Thirty-six states have issued stay-at home orders affecting 86% of Americans and shutting down restaurants, stores, hair salons, movie theaters and other nonessential businesses to stem the spread of the virus.
Several factors likely fueled massive jobless claims last week, analysts say. Major corporations such as Marriott, GE and ZipRecruiter recently have announced layoffs or furloughs that likely translated into a surge of claims.
Many states reported a flood of applications for benefits that jammed phone and online systems the previous week, pushing many of the claims into last week, Morgan Stanley said.
And the $2.2 trillion stimulus bill, which Congress passed late last week, expanded eligibility for unemployment benefits to contractors and the self-employed. Many of those gig workers could have applied in anticipation of the bill’s passage, Bank of America says.
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The abrupt closures of service businesses may mean a disproportionate share of layoffs took place the past couple of weeks. Nomura economist Lewis Alexander expects jobless claims to slow in coming weeks, partly because the stimulus forgives small business loans for firms that hold onto their workers. Daco, however, expects claims to ratchet even higher the next couple of weeks before easing as the outbreak ebbs and many businesses reopen by summer.
Meanwhile, Friday’s jobs report for March is likely to reflect only a fraction of the job losses to date because the survey was taken the week ending March 14, before the bulk of the layoffs occurred. Economists surveyed by Bloomberg estimate the Labor Department’s report will reveal 100,000 net job losses, which includes both layoffs and hiring that largely has come to a standstill.
Payroll processor ADP, which tries to forecast Labor’s total, on Wednesday reported just 27,000 private-sector job losses last month.
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In a sign of the economy’s stunning reversal, Labor tallied a booming 273,000 job gains in February.