The Labor Department on Thursday is set to release the most vivid evidence yet of the widespread economic damage the coronavirus outbreak already has wrought.
Markets and economists are bracing for Labor’s report on initial claims for unemployment benefits, which is expected to show that up to several million U.S. workers were laid off last week, the highest weekly tally on record. The data is set to be released at 8:30 a.m. Eastern.
The pandemic has set off the most abrupt near-shutdown of the U.S. economy in history. Many restaurants, shops, movie theaters, sports arenas and other gathering spots across the country suddenly closed their doors or scaled back service last week to contain the spread of the virus.
Economists have issued widely varying estimates of Thursday’s jobless claims total based on anecdotal reports by about 40 states to news outlets for the first few days of last week. Goldman Sachs estimated the national count will be about 2.25 million but said it could be as low as slightly more than 1 million. Morgan Stanley reckons about 3.4 million. Oxford Economics says about 4 million.
The forecasts differ sharply partly because economists used partial week state totals to estimate tallies for the entire seven days and they extrapolated numbers for states that didn’t give out numbers based on those that did.
Goldman acknowledges claims may have been “front-loaded” to the early part of the week, which would mean a slower pace for the full week. And Morgan Stanley notes that many states have been overwhelmed by the large number of applications both by phone and online, possibly pushing some claims into the following week.
Even if the total falls on the low side at about 1 million, that would still be several times more than peak initial jobless claims of about 700,000 during the deep recession in October 1982, 517,000 two weeks after the 9/11 terrorist attacks, and 570,000 during the depths of the financial crisis in December 2008, Morgan Stanley said.
Coronavirus rescue deal:What we know: How the $2T coronavirus stimulus will affect you and the economy
Underscoring the breathtaking speed of the outbreak’s economic onslaught: Initial jobless claims totaled 281,000 the week ending March 14 as coronavirus-related layoffs were starting — a 33% jump from the prior week’s total, which was near a 50-year low.
A relatively low total of about 1 million on Thursday won’t necessarily be heartening because millions more layoffs are on the way, says Oxford economist Kathy Bostjancic. On the other hand, if the figure is high at several million, “It’s quite ominous,” she says, indicating the eventual tally may be significantly more than economists forecast.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said stock markets on Thursday “will be encouraged by 1 million or less. They will start to get alarmed at 2 million or more.”
Ultimately, Mark Zandi, chief economist of Moody’s Analytics, estimates the outbreak will result in about 7.5 million layoffs, largely in the second quarter, as the 3.5% unemployment rate, a 50-year low, climbs above 10%. That forecast assumes Congress passes the $2 trillion stimulus package Senate leaders hammered out early Wednesday.
St. Louis Fed chief James Bullard has estimated unemployment would reach 30% and Treasury Secretary Steven Mnuchin said 20%. Those figures would spell tens of millions of layoffs but they didn’t include the relief measure.
The new parlor game of guessing the weekly jobless claims total may not continue. In a recent letter, the Labor Department asked the states to no longer report their totals until Labor releases its national figure on Thursday.
“The data from these reports is monitored closely by policymakers and financial markets to determine appropriate actions in light of fast-changing economic conditions,” Gay Gilbert, the administrator of Labor Department’s Office of Employment, wrote in the letter.
More closures:Waffle House says 365 of its restaurants are closed
In a statement to USA TODAY, Labor said, “To maintain a level playing field for everyone in the public, important economic indicators like the weekly unemployment claims should be presented as they have been, in a predictable weekly update. The public must be able to trust in the accuracy, integrity and completeness of the data being reported. Premature release of partial data may give the public an inaccurate picture. Right now, it’s more crucial than ever that the public receives accurate information.”