Unemployment claims swell to 6.6 million as coronavirus paralyzes US economy

Job numbers will get ‘so much worse’: AlphaOne Capital Partners founder

AlphaOne Capital Partners founder Dan Niles on the March jobs report, the coronavirus economy and gives his investing tips during the outbreak.

Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.

Continue Reading Below

The number of Americans seeking unemployment benefits swelled to 6.6 million last week, surging for the third consecutive week as strict measures to contain the novel coronavirus paralyzed the nation's economy.

Claims between the period of March 28 and April 4 neared the previous week's record of 6.87 million, according to the weekly jobless claims report from the Labor Department published on Thursday. The previous week’s total was revised higher by 219,000.

Economists surveyed by Refinitiv expected the number of initial claims for state unemployment benefits to hit 5.25 million.


That brings the number of applications for the last three weeks to more than 16 million, a stunning sign of the colossal economic damage inflicted by the outbreak, compared to a total of 11.5 million filed from the beginning of the year through March 14. With a labor force that totals about 162 million people, that means an estimated one in 10 workers have lost their jobs.

The four-week moving average was 3.5 million, up 1.43 million from a week ago.

The report, which provides the most up-to-date evidence on the labor market and the health of the economy, likely reinforces economists' views that the U.S. has already entered a recession, bringing to an end a historically long, 11-year economic expansion.

“The political pressure that comes from this scale of unemployment really cannot be underestimated," said James McCann, Aberdeen Standard Investments senior economist. "The danger in this crisis was always that Congress and the Fed would not be able to keep pace with the gathering snowball of bad news, and they are certainly at risk of falling behind even as they step into unchartered territory."


Lawmakers are looking to provide relief to laid-off workers with a $2 trillion stimulus package, the largest relief bill in recent memory, that President Trump signed at the end of March.

In addition to giving adults who earn less than $99,000 annually up to $1,200 cash checks, the bill expanded unemployment benefits, broadening the pool of out-of-work Americans who can file claims to include the self-employed and independent contractors — exacerbating the jump in initial claims for state unemployment benefits.

The unemployment rate climbed to 4.4 percent in March, according to Labor Department data that primarily reflected the early part of the month, up from a half-century low of 3.5 percent in February.

During a call with House Democrats this week, former Federal Reserve Chairwoman Janet Yellen, one of the nation's top economists, said the unemployment rate is now at least 13 percent. Yellen she expects a 30 percent contraction of GDP this year, but has seen models as high as 50 percent.

Restaurants, bars, hotels, airlines, cruise lines, automakers and entertainment venues have been hit hard by the pandemic as a growing number of jurisdictions have ordered the closure of nonessential businesses and directed residents to stay at home.

Nearly every industry is laying off workers and reducing pay, with shelter in place orders now implemented in more than 40 states. The leisure and hospitality sector accounted for the bulk of the losses in March, but manufacturing, retail, construction, transportation and even the health care sector saw jobs disappear last month.

California, New York and Michigan, which have been among the hardest hit by the virus outbreak, saw the largest increase in claims for the week.


Source: Read Full Article