The number of Americans filing for unemployment likely shattered a decades-old record last week, with economists predicting a historic surge in jobless claims as the coronavirus pandemic forces businesses around the country to shutter their doors.
Estimates vary drastically for how high the number of people who applied in mid-March for unemployment benefits is, but most economists agree it will be grim. Goldman Sachs analysts forecast that 2.25 million Americans lost their jobs during the period between March 15 and March 21, while economists surveyed by Refinitiv have predicted a more modest, but still massive, 1 million.
Either way, the number, which is set to be released by the Labor Department at 8:30 a.m. ET on Thursday, will very likely eclipse the previous record of 695,000 set in 1982.
Restaurants, bars, hotels, airlines, cruise lines, automakers and entertainment venues have been hit hard by the pandemic as cities and states, trying to mitigate the spread of the virus, have ordered the closure of non-essential businesses and told residents to stay at home.
“Many U.S. states have reported unprecedented surges in jobless claims this week,” Goldman Sachs economist David Choi wrote in a note to clients last week. “While it is possible that claims were front-loaded to start off the week -- implying a slower pace of claims for the week as a whole -- or that our sample is biased toward states with a larger increase in claims, even the most conservative assumptions suggest that initial jobless claims are likely to total over 1 million.”
Claims are almost certain to continue skyrocketing in the coming weeks as large swaths of the economy remain shut down. President Trump suggested during a Fox News virtual town hall that he was considering lifting some of the restrictions by Easter. The holiday lands on April 12 this year.
St. Louis Federal Reserve President James Bullard has warned that unemployment could climb to 30 percent this year, a grim assessment of an economy that just one month ago saw the percentage of unemployed Americans fall to a half-century low.
If so, the number of unemployed Americans could soon top the previous record of 15.3 million, set in the midst of the Great Recession in 2009.
State unemployment insurance systems across the U.S. are ill-equipped to handle the expected deluge of claims from workers who are getting laid off at an unprecedented pace. Despite the historically long, 11-year economic expansion, 22 states’ unemployment trust funds are unprepared to pay out enough in unemployment benefits in the case of a recession, according to Labor Department data.