- The Labour Department reported on Thursday that 4.4 million Americans filed for unemployment insurance last week.
- That brings the five-week total to roughly 26.5 million.
- It’s also the fifth week in a row in which jobless claims have been in the millions, dwarfing the worst stretch of job losses during the Great Recession.
- “It’s crushing – it’s devastating for the economy,” Jason Thomas, the chief economist at AssetMark, told Business Insider.
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US unemployment has remained elevated amid the coronavirus pandemic, for the fifth week in a row dwarfing the worst week of job losses seen during the Great Recession.
American jobless claims totaled 4.4 million in the week that ended Saturday, the Labour Department said in a Thursday report. The consensus estimate was 4.5 million, according to Bloomberg data.
Thursday’s report came in lower than the 5.2 million Americans who filed for unemployment insurance in the previous week, showing a continuing downward trend in jobless claims. Still, the past week’s unemployment filings are still almost six times the 665,000 who filed for unemployment in March 2009, the worst week of job losses during the Great Recession.
“It’s crushing – it’s devastating for the economy,” Jason Thomas, the chief economist at AssetMark, told Business Insider.
While losses are still steep, there is a silver lining in Thursday’s report – it is the third week in a row in which jobless claims have declined, boosting hopes that unemployment is slowing.
“It’s both a sign of progress and it also speaks to the depth of this problem that it’s a sign of progress,” Martha Gimbel, an economist at Schmidt Futures, told Business Insider. It shows not only how fast but how deep and wide the coronavirus outbreak has hit the US, she said.
No industry is safe from layoffs
Still, US economic data continues to deteriorate as the coronavirus pandemic goes on. Millions of Americans are still under lockdown, practicing social-distancing and staying home. In March, retail sales, US existing housing starts, consumer sentiment, and industrial production all posted historic drops, showing that most activity has ground to a halt.
As job losses from the coronavirus pandemic have persisted, industries such as the arts, retail, and restaurants have been hit hard. But unemployment has even crept beyond the industries first hit by the economic shutdown – healthcare, thought to be a recession-proof industry, is also seeing job losses.
In last week’s report, states commented that losses were also recorded in waste management, warehousing, and education, as well as professional, scientific, and technical service industries.
“There’s no industry that looks like it’s totally unscathed by this,” Gimbel said.
There’s worry that after the initial wave of layoffs, job losses will move into the business-services sector, said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.
“The lack of precedent means we have no idea how far this will go, but our initial hope that claims would drop below 1 million per week by the end of May is now touch-and-go,” he said.
More relief is likely needed to keep the economy afloat
State systems remain overwhelmed by the number of claims still pouring in. The $US2 trillion relief bill that President Donald Trump signed into law at the end of March may be contributing to this, as it expanded unemployment benefits to include groups of people who previously weren’t eligible. It also added $US600 a week on top of state benefits and extended how long people could receive help.
It could keep unemployment claims elevated in the coming weeks, especially as businesses continue to struggle amid state lockdowns. Aid through initiatives such as the Small Business Association’s Paycheck Protection Program have run out quickly. The initial $US350 billion program was depleted in just two weeks, leaving many businesses without help.
Natasha Amott, the owner of Whisk, a retail store in downtown Brooklyn, had to furlough four of her 12 employees in the first week New York banned nonessential business and had furloughed two more since, she told Business Insider. She applied for a loan through the PPP on April 4, she said, one day after applications opened.
The loan would help her hire staff back as the economy reopened, she said. But she didn’t get any money – funds ran out just as her bank finally told her she’d been approved.
“It was really disheartening,” Amott said. “It’s money to fund staff and to stay alive. It is the sense of security.”
Without a loan, Amott said, she could make it through the end of May with the internet sales Whisk had been able to keep doing. Even though there’s more funding for the PPP in the works through an additional bill, Amott said she didn’t feel confident she’d receive any.
What’s coming next?
Going forward, economists will continue to monitor jobless claims and other indicators ahead of the April nonfarm payrolls report, which will be released in May. The report will estimate how many jobs the economy added or lost in the month and will update the unemployment rate. Economists are expecting a large jump in unemployment – JPMorgan estimates that the rate could surge to 20% in April, nearing the all-time high of 24.9% seen during the Great Depression.
But the April report may not be the best representation of the full economic impact, especially if the Bureau of Labour Statistics sees decreased participation, as it did in March. In addition, some of the data depends on how the survey is filled out – for example, in March, the BLS noted that the unemployment rate of 4.4% would have been 1 percentage point higher if people who said they were absent from work were classified as unemployed on temporary layoff.
That means that for the time being, weekly jobless claims may be the best snapshot of the economy, because of how quickly the data is released.
“I’m just keeping my fingers crossed that these numbers start coming down and then they start coming down fast,” Gimbel said.