US Jobless Claims Soar to 6.6 Million, Shattering Record

Jobless claims filed in the United States soared to a record high of over 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 nearly ten times bigger than 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.

A person sweeps outside the New York State Department of Labor offices, which closed to the public due to the COVID-19 outbreak in Brooklyn, New York City, on March 20, 2020. (Andrew Kelly/Reuters)

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 wider impact 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.

A graph shows the DAX at the opening bell at the New York Stock Exchange (NYSE) in New York City, on March 19, 2020. (Johannes Eisele/AFP/Getty Images)

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. Estimates in the survey were 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.”

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

Think Tank Sees 20 Million Jobs Lost by Summer

A Washington-based think tank has made a dire forecast of 20 million jobs lost by summertime.

“Our estimate is much larger than was predicted even a week ago, when the forecasting implied 14 million would be furloughed or laid off,” said The Economic Policy Institute (EPI) in an April 1 note that blamed the COVID-19 outbreak for the carnage in labor markets.

In their report, EPI analysts cited the latest Goldman Sachs forecast, which predicted a 9 percent drop in gross domestic product (GDP) for the first quarter of this year and a 34 percent crash in the second quarter.

“Our best guess at this point is that the national economy could lose 14 million jobs by summer 2020,” wrote The Economic Policy Institute (EPI) in a note that blamed the viral outbreak for the dismal figures.

“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.

Goldman’s dismal prediction follows a Federal Reserve estimate that unemployment in the second quarter would range between around 10 percent 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.”

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Author: Tom Ozimek

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