U.S. jobless claims expected at record high

New jobless claims in the United States are expected to have soared to 4 million over last week.

Lucia Mutikani reported the news for Reuters:

The number of Americans filing claims for unemployment benefits likely raced to as high as a record 4 million last week as strict measures to contain the coronavirus pandemic ground the country to a sudden halt, unleashing a wave of layoffs.

The weekly jobless claims report from the Labor Department on Thursday is set to offer the clearest evidence yet of the coronavirus’ devastating impact on the economy, which has forced the Federal Reserve to take extraordinary steps and set the U.S. Congress racing to assemble a record $2 trillion stimulus package.

Economists say the economy is already in recession and the jobless claims report would offer proof of that.

The weekly claims figures are the most timely labor market indicator. The report on Thursday is set to grab attention on both Wall Street and Main Street after the Trump administration requested that states stop giving daily snapshots of applications for jobless aid.

CNBC’s Patti Domm wrote:

About 1 million to 4 million people may have filed for unemployment benefits last week, the largest number ever in such a short time.

The filings figure, which will be released Thursday before U.S. markets open, will be the first indication of how hard the labor force is being hit by the abrupt shutdown of a large part of the U.S. economy by the coronavirus pandemic.

“It’s the tip of the iceberg, and they’re going to be ugly. It depends on the speed at which the claims were filed, and the next week will probably be worse,” said Diane Swonk, chief economist at Grant Thornton. Swonk expects 1 million to 2 million claims were filed in the week that ended Saturday, a sharp jump from the slightly elevated 281,000 filed the previous week.

California Gov. Gavin Newsom said Wednesday afternoon that 1 million people have already filed claims in his state since March 13. California was the first state to order residents to shelter in place.

Paul Davidson from USA Today reported:

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.