The numbers: The number of Americans who applied for unemployment benefits last week rocketed to a record 3.28 million as large parts of the U.S. economy shut down and companies laid off scores of workers to cope with the coronavirus pandemic.
The seasonally adjusted increase in initial jobless claims from March 15 to March 21 was the largest ever, easily crushing the previous record rise of 695,000 in 1982. The prior week were 282,000 and stood near a 50-year low.
The sudden surge in claims is likely just the beginning. Waves of fresh layoffs are expected with many states ordering nonessential businesses to close.
Economists were bracing for a terrible number. Economists polled by MarketWatch had forecast a 2.5 million increase.
What happened: The flood of Americans applying for unemployment benefits was heaviest in states suffering the most from the coronavirus, but they soared everywhere. The biggest increase was in Pennsylvania, followed by Ohio, New Jersey, Massachusetts and California.
The extent of the layoffs, if anything, was understated by the latest claims report.
Many Americans were unable to file claims because some state computer systems got overloaded. And some workers classified as independent contractors, such as Uber drivers, weren’t eligible to apply for benefits, though the new congressional bailout package will soon offer some a chance to collect unemployment checks.
A deluge of additional layoffs are still coming. Americans who work at airlines, retailers, restaurants, hotels, theaters and travel agencies are particularly vulnerable. Small businesses with limited financial resources are also hurting.
Read: Trump weighs whether coronavirus-induced shutdown doing ‘more harm than good’
Big picture: The U.S. labor market was arguably the strongest in half a century just a few weeks ago, but it could quickly deteriorate to recessionary levels.
Some analysts say the unemployment rate could climb to 20% or higher if the worst-case scenario comes to pass and the economy is shut down for months. Those are 1930s Great Depression level numbers.
Washington is trying to cushion the blow and keep unemployment down by expanding benefits and offering tax incentives to companies if they retain their workers as part of a $2 trillion financial-aid package. But even that’s not enough to forestall all the job losses caused by efforts to contain the coronavirus.
What they are saying? “The number of people filing for claims last week is indicative of the degree of shock to the economy,” said Chris Low, chief economist of FHN Financial.
Market reaction: The Dow Jones Industrial Average
and S&P 500
were set to open decline in Thursday trades. The Dow rose on Wednesday for the second day in a row in anticipation of the congressional relief bill.
The 10-year Treasury yield
slipped to 0.78%.
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