WHAT YOU NEED TO KNOW:
- The coronavirus pandemic is disrupting the US economy with the rapid increase of unemployment claims across the country.
- The number of jobless claims is expected to climb sharply to 1.5 million for the week ended March 21.
- States such as Connecticut, California, Pennsylvania, New York, Florida and Ohio are expected to show weekly large increases in jobless filing claims.
The outbreak of coronavirus is greatly affecting the US economy. The huge damage it causes in the labor market is expected to be reflected by the data released on Thursday morning.
According to economists polled by Bloomberg, filing for unemployment is expected to spike to a record-breaking 1.5 million for the week ended March 21. The set record of 695,000 claims was traced back on the week ended October 2, 1982. Initial unemployment claims for the week ended March 14 jumped from 70,000 to 281,000 —the largest single-week growth since the Great Recession.
“In previous deep recessions, most notably in 2008 and 1980, initial claims during the worst four weeks of the recession would total 2 [million], Nomura economist Lewis Alexander wrote in a note to clients March 22. “That is consistent with the shock from COVID-19 compressing a significant deterioration in the labor market into a much shorter period relative to previous contractions.”
Alexander said that the abrupt upheavals in the weekly jobless claims would unlikely persist for long at high levels, indicating that non-farm payroll work losses may be heavily front loaded in relation to past recessions. This means that unemployment rate could accelerate even more quickly.
Unemployment claims would explode to 4 million according to the economists at Citi, while UBS economists estimated the tally to be around 860,000.
A note from Wells Fargo on March 20 said that “initial claims for the week ended March 21 will rocket well over one million next week—and possibly as high as three million. That would surpass anything we saw during the financial crisis and could be upwards of three times the all-time high in claims set back in 1982.”
In Connecticut, approximate claims last week were at 80,000 based on the data consolidated by Morgan Stanley.
Many other states waived requirements that prolong the filing process. California, Pennsylvania, New York, Florida and Ohio are some of the states that are expected to experience surges in the weekly unemployment claims.
Over the past weeks, the hasty spread of COVID-19 cases has caused massive business distortions in the country. The pace of work layoffs has been abrupt, as several cities implemented containment measures such as “shelter in place” and non-essential businesses like restaurants and retail stores were compelled to close.
The government’s $2 trillion fiscal stimulus package approved on Wednesday morning was believed by many to be “too late” in preventing the damage made in the marketplace.
Web searches for ‘unemployment benefits’ spiked over the past month, which began on March 11 and peaked on March 20. President Donald Trump declared a national emergency due to the pandemic on March 13.