Over 6 million Americans filed for jobless benefits last week. How bad could it get?
More than 6 million Americans filed for unemployment benefits last week, giving new credence to economists who warn the United States could be in for an economic catastrophe because of the coronavirus.
Jobless claims surged to a record 6.6 million last week, according to a report released Thursday from the U.S. Department of Labor. The number more than doubled from the previous week’s report, marking the second straight week of unprecedented unemployment claims.
The figures are “consistent with the strict containment efforts” happening across the country, Bank of America economist Joseph Song told Business Insider. In many places, restaurants and businesses considered “nonessential” are closed.
“It’s remarkable,” Song told the publication, referring to the jobless claims. “These are unprecedented numbers, but we’re also facing an unprecedented pandemic.”
As of Thursday afternoon, there were over 217,000 million confirmed cases of COVID-19 in the U.S. and more than 5,000 deaths, according to a Johns Hopkins University database.
As coronavirus lockdowns continue to trigger layoffs, many have been left to wonder just how bad things could get. But experts say while it’s still hard to gauge the severity of the decline, Americans have yet to see the worst of it.
Michael Feroli, J.P. Morgan’s chief U.S. economist, told CNBC he thinks unemployment could peak around 8.5%. He predicts another 3.5 million people will file jobless claims this week.
Goldman Sachs forecasts similar numbers, with 5.5 million new unemployment claims filed by the time the labor department issues its report next Thursday, according to CNBC.
But the investment bank predicts a much higher unemployment rate, topping out at 15% by the fall, according to CNBC.
Other joblessness predictions are far more bleak.
The St. Louis Federal Reserve recently estimated that unemployment could reach a staggering 32.1% -- far higher than the 24.9% reported at the peak of the Great Depression nearly a century ago, according to another article by CNBC.
“These are very large numbers by historical standards,” St. Louis Fed economist Miguel Faria-e-Castro wrote in a blog post published last week. “But this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years.”
The “back-of-the envelope calculations,” as Faria-e-Castro describes them, come with caveats, however. They don’t take into account the effect of the $2 trillion stimulus package from the federal government.
“One can argue that the expected duration of unemployment matters more than the unemployment rate itself, especially if the recovery is quick (and so duration is short),” he added.
Before the COVID-19 crisis, the nation’s unemployment reached a 50-year low in February.
“One thing is certain. The 3.5% jobless rate for February is now history, in the rearview mirror, marking the low-point during the 11-year economic expansion,” Mark Hamrick, senior economic analyst for Bankrate told Forbes in a recent interview. “The consensus is that March payrolls will decline, marking the first such negative number since September 2010.”
The U.S. Labor Department is set to release its March jobs report on Friday.
This story was originally published April 2, 2020 at 11:34 AM with the headline "Over 6 million Americans filed for jobless benefits last week. How bad could it get?."