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There probably won’t be much let-up in the nation’s grim tally of job losses, at least in the short term, as the coronavirus pandemic’s toll on the economy mounts.
Economists surveyed by Bloomberg estimate the Labor Department will report Thursday that 5.5 million Americans filed initial applications for unemployment insurance last week, below the record 6.6 million who sought benefits the previous week. Jobless claims provide the best measure of layoffs across the country.
The figures are so outsized that forecasting them has become something of a crapshoot. Michelle Meyer, chief U.S. economist of Bank of America Merrill Lynch, predicts the latest initial claims total Thursday will be 6.5 million, and JPMorgan Chase estimates an all-time-high of 7 million.
“These numbers are off the charts,” Meyer says. “It tells you about the strain in corporate America as a result of COVID.” Meyer arrived at her estimate by extrapolating from the 16 states that reported 2.3 million claims last week, matching those states’ total for the prior week.
The nation is grappling with the unprecedented shutdown of much of the economy to contain the spread of the virus. Forty-three states accounting for about 95% of the U.S. population are under stay-at-home orders, and nonessential businesses, such as restaurants, stores, movie theaters and other outlets, are closed or sharply scaled back.
A jobless claim number Thursday that falls short of the record 6.6 million filed the week of March 28 won’t provide much solace. Meyer says the figures are likely to hover in the millions each of the next several weeks and could hit records. 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. Self-employed and contract workers are eligible to apply for the first time.
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As a result, she says, a growing number of businesses may let go of workers, knowing they’ll be covered financially, at least for a few months.
Another reason the figures will probably remain elevated is that many state phone and online systems have been so overwhelmed with unemployment applications that many are pushed to subsequent weeks, Meyer says.
The latest total will add to the roughly 10 million Americans who filed first-time claims the past two weeks. Meyer forecasts 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.
One consolation: The claims totals don’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 are eligible for benefits. About half the 4 million people who reported in March that they lost their jobs said they were temporarily laid off, Labor said last week.
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The economy lost 701,000 jobs in March, Labor said, pushing the jobless rate from a 50-year low of 3.5% to 4.4%. That figure grossly understates the damage caused by the pandemic because Labor’s survey was conducted the week ending March 14, before most of the outbreak-related layoffs began.
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