U.S. Weekly Jobless Claims Hit 2.4 Million, Bringing 9-week Total to Nearly 39 Million
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The number of Americans who have filed for unemployment insurance during the coronavirus pandemic has continued to grow. U.S. jobless claims totaled 2.4 million last week, the Labor Department said on Thursday. That matched the median economist estimate. The figure raised the nine-week total to nearly 39 million. That's more than the roughly 37 million people who filed unemployment-insurance claims during the year and a half of the Great Recession.
"The coronavirus crisis continues to inflict swift and deep impacts on the labor market at a near unprecedented clip," said Daniel Zhao, an economist at Glassdoor.
Still, unemployment filings last week fell from nearly three million in the previous week. The number of new filings has now declined for seven straight weeks.
In addition, there were 2.23 million initial claims per unadjusted data for the federal Pandemic Unemployment Assistance program, which extends benefits to those who are not typically eligible. Continuing claims surged to a record 25.1 million in the week that ended on May 9; the data lags behind initial claims by one week.
The weekly report is a crucial indicator of the U.S. labor market, a key segment of the economy that's taken a hit during the coronavirus pandemic. In April, the U.S. economy lost a record 20.5 million jobs and saw the unemployment rate triple to 14.7 percent as business was halted and people were told to shelter in place to contain the spread of COVID-19.
While another decline in weekly jobless claims is a step in the right direction, economists worry that it isn't falling fast enough, especially as states begin to reopen. "Each week of such high claims is a disaster in its own right," Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said in a Thursday note. At this pace, claims are unlikely to dip below one million per week until August, Shepherdson said.
That contrasts with economists' previous expectations that claims would fall below one million in June or July. Even one million claims in one week is significantly more than the Great Recession's worst seven-day stretch, when about 665,000 people filed for unemployment insurance.
The jobs reports for May and June are expected to show even further damage. While job losses may not be as severe, there have been several dismal forecasts for the peak unemployment rate, which could come in either report.
"Given the UI claims totals so far this month, May's jobs report may see the unemployment rate rise further into the high teens or beyond," Zhao said. "While recent indicators show the initial steep job declines are slowing, the labor market remains in a deep hole it will have to climb out of."
This is because the biggest hit to U.S. gross domestic product is expected in the second quarter, which is April through June. JPMorgan has forecast a 40 percent GDP slump and a 20 percent unemployment rate, roughly in line with other estimates from large banks and the Congressional Budget Office.
But other estimates forecast more damage. The Federal Reserve Bank of St. Louis in March projected that job losses would reach 47 million in the second quarter and lead to an unemployment rate of 32 percent. The peak unemployment number partly depends on how the Bureau of Labor Statistics counts workers in the report. In April, the BLS again noted that many of the people marked employed but not at work for other reasons probably should've been counted as unemployed on temporary layoff — a change that would've increased the unemployment rate roughly five percentage points.
There was also a huge drop in labor force participation in the April report that lowered the headline unemployment print. To be considered in the labor force, unemployed workers must be actively searching for a job — something that many put on hold because of the coronavirus pandemic, as businesses are closed, some people are still sheltering at home, and unemployment benefits have been expanded.
"Clearly there is much greater weakness in the labor market than the current reported unemployment rate of 14.7 percent suggests," Michelle Meyer, a U.S. economist at Bank of America, wrote in a Wednesday note.
In addition, the latest jobless-claims report covers the week the May unemployment rate was measured, "giving us a sense of how painful the next jobs report will be," said Nick Bunker, an economist at Indeed. Since the April jobs report, nearly 16 million claims have been filed — 12 percent of employment as of mid-April, or 6.1 percent of the population, he said.
"The May jobs report won't provide the same visceral shock the April report did, but it will show continued damage to the labor market," Bunker said.
And there haven't been strong rebounds in hiring that would calm the labor market and lead to a falling unemployment rate. "As such, the unemployment rate will likely remain elevated for a prolonged period — we forecast it to reach roughly 10 percent by year-end and 8% by the end of 2021," Meyer said.