The surge in weekly unemployment applications was a stunning reflection of the damage the viral coronavirus outbreak is doing to the economy. Filings for unemployment aide generally reflect the pace of layoffs.
What We Know:
- According to the labor department, the number of new jobless claims filed by individuals seeking unemployment benefits rose by more than 3 million to 3.28 million from 281,000 the previous week. The figure is the highest ever reported, beating the previous record of 695,000 claims filed the week ending 2 October 1982.
- As job losses mount, some economist say the nation’s unemployment rate could approach 13% by May. Worsening the problem, most state agencies that handle unemployment claims are operating at historically low funding levels and staffing that are intended to handle the trickle of claims. Just weeks ago, the job market was in the strongest shape it had been in decades.
- The Trump administration is pushing through a $2 trillion stimulus package that includes payments to taxpayers as well as bailouts for hard hit industries. But the money will not head off a huge surge in unemployment.
“This morning’s jobless claims confirm that the United States is in the thralls of a catastrophic unemployment crisis, the likes of which we haven’t seen since the Great Depression. This represents the single worst one-day piece of labor market news in America’s history.” – Andrew Stettner, senior fellow at the Century Foundation thinktank.
- Many people who have lost jobs in recent days have been unable to file for unemployment aid because state websites and phone systems, overwhelmed by a crush of applicants, have frozen up. That logjam suggests that Thursday’s report on filings for unemployment benefits understates the magnitude of job cuts last week.
- Separate legislation passed last week provides up to $1 billion to states to enhance their ability to process claims but that money will take time to be disbursed.
- Taylor Cox, a 29-year old bartender from Indianapolis, was laid off 12 days ago. “People are scared, people don’t know what’s going to happen. The idea of a tipped worker going without tips for eight weeks or more is one of the most frightening things to have to confront,” Cox told the Guardian.
- Ohio and South Carolina stopped releasing daily figures after receiving a memo from the department of labor that read: “The data from these reports is monitored closely by policy makers and financial markets to determine appropriate actions in light of fast-changing economic conditions. As such, the data must remain embargoed until the national claims report is released the following Thursday at 8:30am.”
- Trump is concerned the quarantine measures could prove more harmful than the virus, an opinion that is disputed by economists and health experts. On Wednesday he tweeted: “The real people want to get back to work ASAP. We will be stronger than ever before!”
- Last week’s sharp rise in unemployment marks the end of an historic period of U.S. jobs growth. U.S. employers have added jobs every month for 101 consecutive months and in March the unemployment rate was 3.5%, a 50-year low.
Ellen Zentner, an economist at Morgan Stanley, expects the economy to start recovering by the second half of the year. It will take time for things to return to something close to normal. The unemployment rate could still top 5% at the end of next year.