A record 6.6 million Americans filed for unemployment benefits last week, the latest brutal reminder of the toll the coronavirus pandemic is taking on the U.S. economy.
Analysts had predicted a jobless claims total of anywhere between 3 million and 6 million, after huge numbers of businesses across the country were forced to close down due to the need for social distancing, leaving millions of Americans without work.
Thursday's figure eclipses last week's record-shattering 3.28 million jobless claims, the first real marker of the number of people out of work, according to data released last week by the Department of Labor for the period ending March 21.
Still, some economists said the actual number of unemployed could be much higher, since many applicants had experienced trouble filing a claim, as state labor departments became overwhelmed.
“These are numbers that are way out of the range that we have seen,” Michelle Meyer, head of U.S. economics at Bank of America, told NBC News. “During the financial crisis, we were seeing a peak of about 650,000 [first-time applications] a week.”
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Michael Feroli, the chief U.S. economist at JPMorgan, said he had been expecting a “pretty gnarly” number. He and his colleagues forecast 3.5 million applications.
“I wouldn’t want to tell fairytales about why not to worry about it,” he said. “It’s possible we could see large numbers for a couple weeks.”
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Analysts agree it is likely traditional economic indicators will continue to worsen, as the public health crisis continues.
On Friday, the Department of Labor will release unemployment figures for the month of March, and economists surveyed say they expect to see the economy lost around 100,00 jobs, bringing a decade of job creation to a screeching halt.
April's figure, which will include data for the worst weeks of the coronavirus pandemic, is expected to be even more brutal.
“The March report will effectively be old news,” Meyer said. “The world looked very different two weeks ago than it does today.”
Economists are doing their best to navigate new terrain, but it is difficult. When there is a downturn, they look to history and theory for guidance. But the current crisis presents unique challenges. This isn’t a garden-variety recession.
“Part of the economy was effectively forced to hibernate for a period of time,” Meyer said. “And it’s happened all at once.”
There really is no good analogue. While there are parallels to the 1918 influenza pandemic, it is difficult to disentangle its effects on the U.S. economy from World War I, which preceded it. Also, that was more than 100 years ago; there is inadequate data.
Ordinarily, it takes time for the full picture of a recession to come into focus: its cause and effects, and its scale. This one is different.
Like the rest of us, economists are paying close attention to public health data, and to government efforts to mitigate the virus. No one knows how long it will take to curb the coronavirus outbreak, and it is hard to forecast when there is no clear time horizon.
“There are so many variables, a modal outlook is almost useless,” said Michael Gapen, chief U.S. economist at Barclays. “We talk about scenarios: mild, medium, and heavy.”
He and his colleagues continue to study the policy response to the recession. In recent weeks, the Federal Reserve has lowered interest rates, ramped up bond-buying, and publicly committed to doing all that it can to fortify the U.S. economy. Congress passed a $2 trillion fiscal package, called the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The legislation provides direct payments to many Americans, and it extends unemployment benefits, but an open question is how effective the stopgap measures will be as the crisis continues.
“You need something on a constant basis,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “Given the severity of this downturn, I’m not sure this is going to be enough.”
President Donald Trump announced during a press briefing on Sunday that Americans should continue to work from home and avoid restaurants for another 30 days. He also suggested he would support another round of fiscal stimulus: a $2 trillion infrastructure plan.
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