The U.S. economy continues to shed jobs at a jaw-dropping pace and there’s little sign the payroll losses will ease significantly anytime soon amid the spread of the coronavirus pandemic.
About 6.6 million Americans filed unemployment benefit claims for the first time last week, the Labor Department said Thursday, reflecting another surge in layoffs and an economy that has continued to shut down in stomach-churning waves the past few weeks to minimize further contagion.
The previous week’s record 6.65 million jobless claims total was revised up by 219,000 to a new all-time high of 6.86 million.
Economists had estimated that 5.5 million workers filed initial claims last week, according to a Bloomberg survey.
A staggering 17 million or so Americans now have sought unemployment benefits the past three weeks. The weekly figures dwarf the previous record of 695,000 weekly unemployment applications during a deep recession in October 1982.
Forty-three states accounting for about 95% of the U.S. population are under stay-at-home orders, with nonessential businesses such as restaurants, stores, movie theaters and other outlets closed or sharply scaled back. Airlines and hotels also have been decimated as Americans shun air and other travel.
“There are reasons to think this is only the beginning,” says economist Jesse Edgerton of JPMorgan Chase. In February, he says, there were nearly 50 million workers in industries directly affected by coronavirus-related shutdowns.
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“Its effects are also likely to spread well beyond these sectors,” he says.
Michelle Meyer, chief U.S. economist of Bank of America Merrill Lynch, says jobless claim figures are likely to hover in the millions each of the next several weeks and could hit new records. That’s partly because more businesses are closing, at least temporarily, as they run short of cash or lose for customers.
Also, the $2.2 trillion stimulus package passed by Congress, known as the CARES Act, extends unemployment benefits up to 39 weeks and provides an additional $600 weekly federal supplement to state payouts averaging $300 to $400 a week, Meyer notes. Also, self-employed and contract workers are eligible to apply for the first time.
As a result, she says, a growing number of businesses may let go workers, knowing they’ll be covered financially, at least for a few months.
Meyer is forecasting a total 15 million to 20 million job losses by May, pushing unemployment to 15% from the current 4.4%. Oxford Economics projects 26 million layoffs and a 16% jobless rate over the next two months.
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One consolation is that the claims totals doesn’t represent permanent layoffs only. Americans temporarily laid off, or furloughed – such as many restaurant workers — as well as many of those whose hours have been reduced also are eligible for benefits. About half the 4 million people who reported in March that they had lost their jobs said they were temporarily laid off, Labor said last week.