The New York Stock Exchange. Picture: AFP/JOHANNES EISELE
The New York Stock Exchange. Picture: AFP/JOHANNES EISELE

Washington — The number of Americans applying for unemployment benefits surged for a second week and reached about 10-million over the past two weeks, highlighting the devastating economic effect of the coronavirus as shutdowns widened across the country.

A record 6.65-million people filed jobless claims in the week ended March 28, according to the US labour department figures released on Thursday, as many stores and restaurants were forced to close across the nation to mitigate the Covid-19 crisis. The prior week’s level was also revised up slightly to 3.31-million.

US stocks fluctuated at the open following the report, which was even worse than the most dire estimate in Bloomberg’s survey of economists.

“I never thought I’d see such a print in my lifetime as economist,” said Thomas Costerg at Pictet Wealth Management, who had the highest forecast in the Bloomberg survey, at 6.5-million. Claims are likely to stay elevated as more states announce stay-at-home orders, and it would be “not unthinkable” to see a 20% unemployment rate, more than double the high that followed the last recession, he said.

The weekly claims data, usually the first to show a hit amid a downturn, highlight the extent to which US businesses and workers are reeling from the global health crisis. The report shows that the virus is having a wider impact beyond just hotels and restaurants, with states reporting impacts in health and social assistance, factories, retail and construction.

The 9.96-million combined initial claims in the past two weeks is equivalent to the total in the first 6.5 months of the 2007-2009 recession.

What economists say

“If initial claims in the vicinity of 3-5 million persist for several more weeks, unemployment will climb towards 15% in April. Further increases in the unemployment rate will largely depend on how long the crisis (and lockdown) lasts,” according to Eliza Winger and Carl Riccadonna.

Continuing claims, which are reported with a one-week lag, jumped by 1.25-million to 3.03-million in the week ended March 21 — the highest since 2013. That pushed the insured unemployment rate up to 2.1% from 1.2%.

Friday’s jobs report is expected to show the first monthly decline in payrolls since 2010. Nonetheless, those figures will show only the start of the labour-market damage, as the government’s survey period covered early March, before the biggest rounds of layoffs and closures.

“When you look at the number last week and this week and take those together, that’s roughly a six percentage-point rise in the April unemployment already, and we have a few more weeks to go for the April employment report,” Michael Gapen, chief US economist at Barclays, said on Bloomberg Radio.

“It is likely the unemployment rate will be rising above where we saw it in 2008 and 2009 and may come as soon as that April employment report, if not certainly into the May report.”

Bloomberg