U.S. Jobless Claims Jump to 3.28 Million, Quadruple Prior Record
Claims increased in all 50 states with nine states reporting increases of at least 1,00,000 from the prior week.
(Bloomberg) -- The magnitude of the economic devastation being wrought by the coronavirus pandemic was laid bare on Thursday when the U.S. government reported an unprecedented surge in the number of people seeking jobless benefits.
A total of 3.28 million people filed for unemployment insurance in the week ended March 21, dwarfing previous highs in Labor Department reports published since 1967. Two weeks earlier, before closures of businesses swept across vast swaths of the country, the number stood at 211,000, close to a half-century low.
“This shows the severity of the downturn, and the speed of it,” said Michelle Meyer, head of U.S. economics at Bank of America Corp. “It speaks to the unusual nature of this recession -- it is an abrupt plunge into recession versus prior downturns, where the shock has time to multiply. We could have very high numbers continue for the next few weeks.”
Economists’ projections for the figure ranged as high as 4.4 million. Before adjusting for seasonal fluctuations, initial filings were at just under 3 million.
Even with the surge, the S&P 500 extended its advance, heading for its first three-day rally since February, as investors speculated the $2 trillion rescue package passed by the Senate will lessen the pandemic’s toll on the economy.
Claims increased in all 50 states and the District of Columbia, with nine states reporting jumps of at least 100,000 from the prior week, unadjusted state data showed:
- Pennsylvania reported the biggest number of claims, with an estimated 378,900
- California claims rose by 129,200 to 186,800
- In New York state, where approximately half of all known coronavirus cases in the U.S. are located, claims rose by 66,000 to 80,300
- Ohio claims rose to an estimated 187,800
- Illinois claims rose to 114,700
- Florida claims rose to 74,000
- Michigan claims jumped to 129,300
“This morning’s data leaves no doubt that the economy is currently in a recession,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG.
The surge reflects reports from state-level unemployment offices across the country last week citing unprecedented levels of web traffic and exponential increases in applications for unemployment benefits. The reported claims likely represent just the beginning of millions of virus-related job losses as more states order non-essential businesses closed.
What Bloomberg’s Economists Say
“The deterioration in claims to date already implies an unemployment rate approaching 5.5% in April, and there is no reason to believe this is the peak. The volume of applications overwhelming state administrative offices suggests additional million-plus weeks for initial claims may lay ahead.”
-- Eliza Winger, Carl Riccadonna and Yelena Shulyatyeva
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U.S. lawmakers are aiming to boost benefits for those laid off. As part of a $2 trillion stimulus package waiting to be approved by the House of Representatives, unemployment insurance would be extended and expanded.
The sharp rise in claims signals the unemployment rate could rise several percentage points in coming months, after matching a 50-year low of 3.5% in February, which reflected 5.8 million unemployed Americans.
The sudden stop of the nation’s economy paired with a consumer retrenchment have several economists predicting gross domestic product will shrink in the second quarter by the most in quarterly records dating back to 1947.
In St. Petersburg, Florida, getting benefits has already stymied sportswriter Jim Holliman in the first days of his unemployment. Holliman, 47, had been freelancing for a unit of CBS Interactive focused on sports gambling in recent months, and he hoped to turn it into a full-time gig. He’s been in and out of jobs since his longtime employer, the Tampa Tribune newspaper, shut down in 2016.
Coverage opportunities dried up this month as major sports leagues and arenas closed. By late last week, his employer notified him it barely had enough work for full-time reporters, Holliman said Wednesday. “I was getting close to 40 hours a week freelancing and hoping to turn it into a full time job, and then obviously the sports world hit a brick wall,” he said.
Other Data
- A separate report Thursday from the Commerce Department showed the U.S. merchandise trade deficit narrowed in February to $59.9 billion, the smallest since September 2016, as exports increased and imports declined.
- The pickup in shipments to overseas customers reflected more U.S. sales of motor vehicles and industrial supplies, such as petroleum products. The value of imports was the smallest since September 2017 as companies purchased less capital equipment, industrial supplies and consumer goods.
- Gross domestic product climbed at an unrevised 2.1% annualized pace in the final three months of 2019, ahead of the virus disruptions that will likely see the economy contract in the first and second quarters.
- The Federal Reserve Bank of Kansas City’s manufacturing index fell to minus 17 in March, its lowest reading since 2009, as the outbreak fueled concerns of shutdowns and future demand.
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