USA TODAY International Edition
30M filed jobless claims in 6 weeks
Latest numbers dip but show ongoing job losses
About 30 million Americans filed for unemployment benefits over the past six weeks, as the nation shed a decade’s worth of jobs in days and confronted a series of milestones highlighting the unprecedented toll the coronavirus is taking on the U. S. economy.
Roughly 3.8 million people filed for unemployment last week alone, the Labor Department said Thursday, fewer than the 4.4 million who filed the week before and down from the alltime high of 6.86 million applications in late March. Jobless claims provide the best measure of layoffs across the country.
While the number of new claims continues to slide, the tally is still monumental and is building toward a projected unemployment rate of 16.4% in May that would be the highest since the Great Depression, according to Morgan Stanley.
By mid- April, more claims had been filed over four weeks than there were jobs created in the wake of the economic downturn of 2008.
“The COVID- 19 crisis has made us accustomed and desensitized to previously unthinkable phenomena, but today marks a tough reality for our country and for American workers,’’ Andrew Stettner, senior fellow at The Century Foundation, said in a statement. “The real question now is how many of these millions of workers flooding into state unemployment systems make it out to the other side with a payment.”
The latest number of jobless claims was one of several bleak markers re
ported this week, demonstrating how much the coronavirus pandemic and the efforts to contain it are devastating the economy.
Consumer spending dropped 7.5% in March, the steepest plunge in 40 years, as states began to shutter businesses, residents were ordered to stay home and millions of Americans began to lose their jobs.
Consumer spending represents 70% of the country’s economic activity, and the plunge in purchases contributed to the nation’s worst financial showing since the depths of the Great Recession. Gross domestic product, the value of all goods and services in the U. S., contracted at a seasonally adjusted annual rate of 4.8% between January and March.
It was the first time output dropped in six years, and the steepest slide since the end of 2008. The latest round of jobless claims is a prelude to next week’s monthly jobs report, which will “likely show a historic drop of nearly 20 million jobs and an unemployment rate in the high teens,” according to Contingent Macro Research.
Many people applying for unemployment insurance likely lost work weeks ago but were only recently able to file claims because state systems have been bogged down or even immobilized by the unprecedented number of applications.
But layoffs and furloughs are also continuing, as businesses struggle amid lingering shutdowns and local and state governments consider job cuts as tax revenue shrinks.
“We hoped claims would decay more quickly after the initial wave on the grounds that the consumer- facing businesses forced to shut by the lockdowns could close only once,’’ Pantheon Macroeconomics said in a note. “The continued wave of multi- million losses suggests that supply chains and business services firms are now laying off large numbers of people too.”
And that will take a heavy toll, economists say.
“Based on recent ( unemployment insurance) claims and the expectation for a near- complete freeze in hiring, it is not unrealistic to think that the economy may lose 20 million jobs or more in April alone,” Dante DeAntonio, an economist at Moody’s Analytics, wrote in a note to clients. “It is becoming clear that estimated employment losses over the last month will be the largest in history, by a long shot.”
While new claims are expected to continue to slow, Pantheon Macroeconomics wrote in a research note that it thinks they won’t dip below 1 million until mid- June. Before the pandemic, roughly 215,000 claims were being filed per week.
Jobless claims may also continue to grow because the $ 2.2 trillion federal emergency stimulus package approved in March expanded the number of people who can receive unemployment benefits, including those who’ve gone from full- time to part- time work.
“It’s imperative that states move through these claims and deliver payments as efficiently as possible,” Stettner says, “especially for the millions of gig workers and college students who will file for new pandemic unemployment assistance that is just now being made available.’’