US weekly jobless claims hit 3.8 million, bringing the 6-week total to more than 30 million
- US jobless claims were 3.8 million for the week ending April 25, the Labor Department said Thursday. The median economist estimate was for 3.5 million claims during the week.
- That brings the six-week total to roughly 30 million.
- It's the fourth consecutive week of declines since claims peaked at the end of March.
- Still, elevated claims in the millions weeks in a row shows persistent economic fallout from the coronavirus pandemic.
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Coronavirus-induced layoffs appear to be slowing down as states weigh slowly reopening their economies.
US jobless claims were 3.8 million for the week ending April 25, the Labor Department said Thursday. The median economist estimate was for 3.5 million claims during the week. The figure brings the six-week total to more than 30 million.
Thursday's report is down from the 4.4 million claims in the week ending April 18, marking the fourth consecutive week where filings for unemployment insurance have fallen. Still, claims remain historically elevated — in the worst week of the Great Recession in 2007-2009, 665,000 filed for unemployment insurance.
"The baseline has been moved so much," Nick Bunker, economist at Indeed, told Business Insider. "It's still deeply disconcerting about the state of the labor market, but is just not feeling as terrifying as the numbers we've seen before."
The weekly US jobless claims report is the latest indicator of the economic pain wrought by the coronavirus pandemic since mid-March, when most of the country went into lockdown to curb the spread of Covid-19.
A slew of economic data over the last month has shown the extent of the damage — retail sales, consumer sentiment, and factory output all posted historic falls. US gross domestic product, a measure of economic growth, fell 4.8% in the first quarter, the sharpest drop since the Great Recession.
There's likely worse to come — economists expect that the greatest economic contraction will hit in the second quarter, which includes the months of April through June. And, while unemployment claims have trended down over the last few weeks, continued elevated applications are worrisome. In just six weeks, roughly 29 million Americans have lost their jobs and filed for UI.
"It's a very uncomfortably large share of the workforce," Michelle Meyer, chief US economist at Bank of America told Business Insider.
After last week's unemployment claims report, one in six American workers had recently lost a job. If job losses continue, less than half of working Americans will have a paycheck in May, according to James Knightley, chief international economist at ING.
High weekly claims may be lifted by backlogs in state unemployment offices. There have been many reports of state websites crashing because of overwhelming application volume.
Emma Gibson, 23, was the assistant audio engineer for Sesame Street Live until mid-March, when the touring show was canceled and all of the staff was sent home. She applied for unemployment in her home state of Florida at the end of the month, she told Business Insider.
Her application was pending until this week, when she was finally able to log in and see that her claim was processed and verified, nearly a month after applying.
"That's definitely been a struggle," Gibson said. "When you apply it says it will take 72 hours to process, and it definitely took way longer than that."
Second wave
Elevated claims may also show that layoffs due to the coronavirus pandemic have extended beyond the first sectors hit, such as entertainment, restaurants, and nonessential retail and services.
"We hoped claims would decay more quickly after the initial wave, on the grounds that the consumer-facing businesses forced to shut by the lockdowns could close only once," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Thursday note.
He continued: the "wave of multi-million losses suggests that supply chains and business services firms are now laying off large numbers of people too."
There is more help on the way that could alleviate unemployment claims. On Friday, President Donald Trump signed a $484 billion coronavirus relief package into law. Included in the bill is an additional $320 billion for the Paycheck Protection Program, which is intended to help small businesses keep their employees on payroll. The program was given more funding after it exhausted $350 billion in just two weeks.
"Claims will be a good way of gauging whether or not the program is successful, whether or not businesses are actually adapting to behavior or not," Meyer said.
In addition, some states including Florida, South Carolina, and Georgia have started reopening parts of their economies this week, which could bring unemployment claims down as people return to work. Still, Meyer cautions that any progress will likely be slow as reopenings unfold.
The economy going forward
Economists will continue to watch data to gauge the full extent of the downturn, assess how much stimulus from the federal government is helping, and weigh what shape an economic recovery might take.
Initial hopes were that the US would experience a V-shaped recovery, characterized by a swift return to pre-coronavirus levels, it seems less likely that this will be the case. Now, most expect a longer, slower recovery that takes a "U" shape.
While jobless claims have become a favored snapshot of the labor market, it's likely that they're an undercount of true economic pain, Bunker said. A study from the Economic Policy Institute released Tuesday found that for every 10 people who filed an unemployment claim, three to four tried but could not make it through the system, and two did not try to apply because it was too difficult.
Next week, the April employment report will shed more light on the coronavirus crisis' impact on the labor market. Economists expect that the unemployment rate could spike above 20%, nearing the all-time high of 24.9% set during the Great Depression.
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