6.65 million workers filed for unemployment insurance last week, 10 times the record set in ’82
For the past several years, analysts have usually only glanced at the weekly number of new claims for unemployment benefits. These have remained historically low—just a bit above 200,000. The focus instead has been on the monthly report from the Bureau of Labor Statistics as the growth in new jobs that began under President Barack Obama continued for 113 consecutive months. But as the first economic impacts of the coronavirus took hold, new benefit claims soared by 70,000 three weeks ago, hit a record-shattering 3.28 million two weeks ago, and last week, the Labor Department announced today, rocketed by another 6.65 million. That’s almost 10 times the record of 695,000 new claims set one week late in the recession of 1982.
By Meteor Blades
Add that combined total of nearly 10 million people to the 5.8 million already out-of-work, and it pushes the unemployment rate from 3.5% to 9.5%. But that’s not what the BLS report will show Friday. More about that in a moment.
Many more millions will be laid off or furloughed in April. It’s no longer possible to find an economist who doesn’t think the unemployment rate will hit double digits by May at the latest.
To be sure, our situation is unusual. The economy obviously didn’t suddenly get worse for economic reasons. And there’s a much bigger safety net than usual (though it’s still inadequate). But the worries and pain caused by the economic stress of this crisis plus the pain from the toll being taken by the coronavirus have just gotten started. Right now we need to save lives and help everyone survive financially. But when this is over, it should never be forgotten why this crisis was so much worse than it should have been. It demands a reckoning.
As for last week’s new unemployment claims, the overwhelming majority of those millions of people newly out of work won’t be counted in the job report Friday. Analysts are all over the place in what they think it will show, ranging from job losses of 125,000 to 1.25 million. The median prediction, according to Marketwatch, is for losses of 140,000. Obviously, none of those figures come close to the avalanche of jobs we know have already been lost.
As explained here, the surveys the BLS uses to determine the number of jobs gained or lost and the rate of unemployment are conducted during the week of the 12th of each month. The BLS report for March thus covers the last half of February and first half of March. Shutter-your-business and stay-at-home orders that led to layoffs and generated all those new benefit claims came after the survey period.
It won’t be until the BLS data revisions for March—which will be included in the April report released on May 8—that we’ll get a better picture of what happened last month. Well before those statistics are published, however, the depth of the economic damage will have become personally apparent to tens of millions of Americans.
Two of the multitude of ways that will be felt are delays in people getting their unemployment money as states’ computer systems crash under the deluge of filings and the pain for people who won’t get unemployment benefits even under the federal government’s expanded eligibility mandate.
The survival legislation passed by Congress to ease the impacts of the economic shutdown were put together in the hopes of discouraging companies from laying off workers. That is what’s happening at some of the nation’s largest companies. Delta Air Lines and United Airlines announced last week that they won’t cut pay or furlough employees before Sept. 30 so as to comply with the six-month worker-protection provision in the legislation. General Motors Co. and BP also plan to keep paying their workers. But a count by Bloomberg found major retailers have already slashed more than 600,000 jobs. Among them: Marriott, Macy’s, JC Penney’s, the Gap.
Meanwhile, some companies have found that accepting new ways of doing things makes it possible for them to keep business going with minimal or no layoffs:
When initially assessing its 120,000 U.S. workers in February, Verizon Communications Inc. estimated that about 45,000 could work from home, HR chief Christine Pambianchi said in an interview. Then as cities, states and the federal government closed businesses and told most people to remain at home, the company broadened its thinking.
“We now have 115,000 people working from home, in jobs that were not enabled to work at home, that previously were things we never would have considered to be something that folks could do from home,” she said.
Even this deep into the 21st Century, getting approval to telecommute is no easy task for many workers. Too bad it’s taking a crisis of such proportions to turn companies around. How many will continue on the same path after the crisis is anybody’s guess.
Just as economists’ predictions for today’s new claims report and Friday’s jobs report are all over the place, so too with the forecasts for the next few months.
Paul Ainsworth, the chief economist at Capital Economics, predicts that inflation-adjusted gross domestic product will fall at a 40% annualized rate in the second quarter that ends June 30, with 14 million lost jobs boosting the unemployment rate to 12%. He estimates that 10 million of those jobs will come from the retail, food services and accommodations sectors. He expects the total ultimately to hit 20 million layoffs.
The Goldman Sachs Group predicts the U.S. economy will contract 34% in the second quarter, and unemployment will hit 15%. That’s 18 million axed jobs.
Lydia Boussour, an economist at Oxford Economics, estimates that more than 20 million jobs will be lost, and low-paid workers and small businesses will get hit worst.
Federal Reserve Bank of St. Louis President James Bullard has an even more dire forecast. In a March 22 interview, he said, “the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product.” An economic team at the St. Louis Fed forecast as many as 47 million layoffs, and an unemployment rate at 32.1%.
Up until the past few days, most analysts were forecasting a quick economic rebound from the economic impacts of the virus before the year is out. But now a growing number aren’t so sure and believe the downturn could be substantially worse than the Great Recession’s. How much worse? They say the economy could contract by 9% this year. That’s more than three times as bad as during the Great Recession.
The unprecedented nature of the current situation—with the coronavirus’ burgeoning death toll combined with the lack of comprehensive data—means that, even more than usual, predictions about where we’re headed economically will remain highly speculative for some time to come. What’s not speculation is the malicious stupidity of leaders who exacerbated this disaster with their happy-talk, delay, and failure to coordinate.
They ought to pay. The worst of the lot ought to be out digging some of the graves they made inevitable.
(Crossposted with DailyKos. Image via NY State Unemployment System.)