Shannon Stapleton/Reuters
- US weekly jobless claims spiked to a second consecutive weekly record as coronavirus-induced layoffs persist across the entire country.
- 6.64 million Americans filed for unemployment insurance in the week ending March 28, the Labor Department reported Thursday.
- Economists expect that the US will fall into recession in the second quarter if it isn't already in one. The sky-high jobless claims could raise the unemployment rate by multiple percentage points.
- "What is striking about this crisis is how broad, how deep, and how rapid these cuts have been," Julia Pollak, labor economist at ZipRecruiter, told Business Insider.
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A record number of Americans filed for unemployment benefits for a second straight week as a nationwide coronavirus lockdown continues to force layoffs.
US weekly jobless claims jumped to 6.64 million in the week ending March 28, the Labor Department reported Thursday. That outpaces the prior week's report, which already reflected a filings more than quadruple the previous record.
Andy Kiersz / Business Insider
"It's remarkable," Bank of America economist Joseph Song told Business Insider. "These are unprecedented numbers, but we're also facing an unprecedented pandemic," he said, adding that the report is consistent with the strict containment measures seen around the US to curb the spread of COVID-19.
The report shows further damage to the US economy just days after unemployment claims spiked to a then-record high of 3.28 million for the week ending March 21. In total, more than 10 million Americans have filed for unemployment over two weeks.
The surge started in mid-March, when the US ramped up social-distancing measures to combat the coronavirus pandemic, shutting down schools and factories, and sending many workers home.
Since the last report, more states have followed with increased guidelines encouraging people to stay inside, and President Donald Trump extended federal social-distancing guidelines through April 30. In addition, a number of major corporations such as General Electric and Macy's have either announced layoffs or furloughed workers.
"What is striking about this crisis is how broad, how deep, and how rapid these cuts have been," Julia Pollak, labor economist at ZipRecruiter, told Business Insider.
This week's report also revised last week's number higher by 24,000, saying that weekly jobless claims were actually 3.3 million in the week ending March 21. They said the number may have been under-counted due to issues at state unemployment offices, which were inundated with calls and unable to process them quickly enough.
An overwhelmed system
Aaron Heaps, 28, an actor, filed for unemployment in New York in March when the show he was working on - the national tour of Finding Neverland - was canceled as social gatherings were banned to curb the spread of COVID-19. At the same time, jobs he usually worked at restaurants in the city were on hold as non-essential businesses closed due to the outbreak.
Heaps spent four days in a row calling the New York unemployment office, he told Business Insider.
"The website was crashing, so there was no point in even trying that," he said. Eventually, he got through and was able to receive benefits. He's hopeful that his restaurant jobs in the city will be safe after the pandemic, but is worried about acting jobs - the outbreak hit during what is usually a busy audition season.
"I'm hoping to go back to lots of auditions," he said. "But I may go back to there being nothing."
The economic impact
The eye-popping figures are a troubling sign of what is to come. Most economists expect that the US will fall into a recession in the second quarter of 2020, if it isn't in one already. Goldman Sachs is forecasting US gross domestic product output will shrink by 34% in the second quarter, and the unemployment rate will spike to 15% in the second half of the year.
While the late March unemployment numbers won't show up in the monthly jobs report to be released Friday, they will have a large impact on the April report, released in May. Millions of Americans out of work could raise the unemployment rate, previously at historic lows, by multiple percentage points.
The White House is working with Congress to provide relief for the US economy, aiming to effectively pause it until it can be reopened following the coronavirus pandemic. On Friday, President Trump signed a $2 trillion coronavirus relief package into law.
The stimulus bill will send checks to most American households, give much-needed help to distressed businesses, and expand unemployment by adding as much as $600 per week to state benefits.
Will mass unemployment continue?
Expanded benefits are needed to keep the economy afloat until work can resume and consumers can go out and spend again. The additional benefits could also boost unemployment claims in the future, as more workers than ever now qualify for help, Elise Gould, an economist at the Economic Policy Institute, told Business Insider.
Still, unemployment insurance claims numbers are likely an underestimate of true economic pain, she said, as there will always be some people that aren't able to access applications, or don't know that they're eligible for benefits. There will also be companies that simply do not make it through the economic downturn, she said.
The next question is when the record unemployment claims reports will stop, Glassdoor economist Daniel Zhao told Business Insider.
"The economy and the labor market will bounce back once the crisis is over. The question is really when, exactly and how quickly," he said. "Once people start getting back to work, will everybody be able to find a job again?"
But forecasting in this unprecedented situation is difficult.
"The numbers are so large and they may be bigger than what they're showing," Gould said. "You have nothing in history that looks like this. So how do we even make predictions for what is going on here?"
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