Unemployment in the US is swelling to catastrophic numbers. Tony Lamperti was laid off from his bartender and water jobs in Houston, but doesn’t qualify for unemployment in Texas. He’s found temporary part-time jobs for the time being. (April 23)
About 30 million Americans filed for unemployment benefits over the past six weeks, a grim marker revealing how badly the coronavirus pandemic has crippled the U.S. economy.
Roughly 3.8 million people filed for unemployment last week alone, the Labor Department said Thursday, lower than the 4.4 million who filed the week before and down from the all-time high of 6.86 million applications in late March. Jobless claims provide the best measure of layoffs across the country.
While the number of claims continues to slide, the tally is still monumental, and is building toward a projected unemployment rate of 16.4% in May that would be the highest since the Great Depression, according to Morgan Stanley.
By mid-April, more claims had been filed over four weeks than there were jobs created in the wake of the economic downturn of 2008.
“The COVID-19 crisis has made us accustomed and de-sensitized to previously unthinkable phenomena, but today marks a tough reality for our country and for American workers,’’ Andrew Stettner, senior fellow at The Century Foundation, said in a statement. “The real question now is how many of these millions of workers flooding into state unemployment systems make it out to the other side with a payment.”
The latest round of claims is a prelude to next week’s monthly jobs report which will “likely show a historic drop of nearly 20 million jobs and an unemployment rate in the high teens,” according to Contingent Macro Research.
The nation’s economy stuttered to a near halt in March, as travel slowed, stores closed, and most residents were told to stay home to slow the spread of the coronavirus.
Many people applying for unemployment insurance likely lost work weeks ago but were only recently able to file claims because state systems have been bogged down or even immobilized by the unprecedented number of applications.
But layoffs and furloughs are also continuing, as businesses struggle amid lingering shutdowns and local and state governments consider job cuts as tax revenue shrinks.
Government workers could be next to lose jobs: State, city workers could be next wave of layoffs as tax revenue dries up amid COVID-19
“We hoped claims would decay more quickly after the initial wave on the grounds that the consumer-facing businesses forced to shut by the lock downs could close only once,’’ Pantheon Macroeconomics said in a note. “The continued wave of multi-million losses suggests that supply chains and business services firms are now laying off large numbers of people too.”
And that will take an unprecedented toll, some economists say.
“Based on recent (unemployment insurance) claims and the expectation for a near-complete freeze in hiring, it is not unrealistic to think that the economy may lose 20 million jobs or more in April alone,” Dante DeAntonio, an economist at Moody’s Analytics, wrote in a note to clients. “It is becoming clear that estimated employment losses over the last month will be the largest in history, by a long shot.”
While new claims are expected to continue to slow, Pantheon Macroeconomics wrote in a research note that it thinks job losses are “unlikely to fall below one million per week until late May.” Before the pandemic, roughly 215,000 claims were being filed per week.
Morgan Stanley projects that the average jobless rate will hover at 15.7% during the second quarter, but predicts the U.S. will experience a 16.4% unemployment rate in May, “higher than any point since the Great Depression.”
Jobless claims may also continue to grow because the $2.2 trillion federal emergency stimulus package approved in March expanded the number of people who can receive unemployment benefits, including those who’ve gone from full-time to part-time work.
“It’s imperative that states move through these claims and deliver payments as efficiently as possible,” Stettner says, “especially for the millions of gig workers and college students who will file for new pandemic unemployment assistance that is just now being made available.’’
Follow Charisse Jones on Twitter @charissejones
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