US weekly jobless claims hit 3 million, bringing the 8-week total to more than 36 million

• The number of US jobless claims last week totaled 3 million, the Labor Department said Thursday. The median economist estimate was for 2.5 million claims.
• That raises the eight-week total to more than 36 million.
• It also marks the sixth week in a row where jobless claims have declined but remained highly elevated.
• "They remain grotesquely high by all but the most recent standards," Ian Shepherdson of Pantheon Macroeconomics wrote in a note. "In the worst single week after the crash of 2008, claims reached just 665,000."
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The number of Americans who have filed for unemployment insurance amid the coronavirus outbreak continued to grow last week.

US jobless claims totaled 3 million last week, the Labor Department said Thursday. The median economist estimate was for 2.5 million claims for the seven days that ended Saturday. The figure raises the eight-week total to more than 36 million.

Still, it's the sixth straight week in which new unemployment-insurance claims have fallen. But claims remain elevated at a level that dwarfs that of the largest week of US job losses — 665,000 — during the Great Recession.

"They remain grotesquely high by all but the most recent standards," Ian Shepherdson of Pantheon Macroeconomics wrote in a note. "In the worst single week after the crash of 2008, claims reached just 665,000."

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Continued claims

Persistent high unemployment threatens hopes of a swift economic recovery even as some states across the country begin to slowly reopen.

Alongside initial jobless claims, continued claims — reflecting those who have been approved for unemployment filing each week for their benefits — have also surged. In the week ending April 25, continued claims surged to nearly 23 million, according to the Labor Department (the data lags initial claims by a week).

"Historically, the sum in initial jobless claims between survey periods vastly surpasses the change in continuing claims, and the latter tracks much more closely with the change in the number of unemployed especially during recession," Bank of America economists led by Alexander Lin wrote in a May 6 note.

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Going forward, the continued claims number will be important for this reason. It also shows how many Americans are dealing with extended periods of unemployment, which can have massive repercussions on consumer sentiment and spending going forward — people without paychecks often curb spending.

Given that consumer spending is a cornerstone of the US economy, getting workers back to jobs as quickly as possible will be key in any recovery.

Rising unemployment

Last week, April's jobs report showed that the US economy lost 20.5 million payrolls during the month and sent the unemployment rate to 14.7%, the highest since the peak of the Great Depression. But even the staggering print was a likely undercount of the full scope of devastation from sweeping lockdowns to curb the spread of COVID-19.

And, the unemployment rate is likely to go even higher over the next few months if job losses continue, especially in the absence of a hiring rebound.

The Federal Reserve Bank of St. Louis in March projected that job losses would reach 47 million in the second quarter and lead to an unemployment rate of 32%. That would be a new record, handily beating the estimated 24.9% unemployment rate reached during the Great Depression.

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There are other dire estimates. On Wednesday, Goldman Sachs again adjusted its forecast, and now says US gross domestic product will slump 39% in the second quarter and that the unemployment rate will reach a peak of 25%. JPMorgan's forecast sees GDP contracting 40% in the second quarter and the unemployment rate spiking to 20%.

There was one silver lining in Friday's jobs report that gives a glimmer of hope for the labor market. In April, 18.1 million people were classified as unemployed on temporary layoff, a 10-fold increase from the previous month.

That means that those workers think they have jobs waiting for them once the economy reopens. "If that's true, then this'll be the shortest depression in history," Robert Frick, corporate economist with Navy Federal Credit Union, told Business Insider.

Still, there's concern that many businesses might not survive the coronavirus-induced shutdowns that have thrown the US economy into a recession.

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In a Wednesday presentation for the Peterson Institute for International Economics, Federal Reserve Chairman Jerome Powell said that losing thousands of small and medium-sized businesses "would destroy the life's work and family legacy of many business and community leaders and limit the strength of the recovery when it comes."

He also indicated that more fiscal stimulus measures may be needed in the economic recovery.

On Tuesday, House Democrats proposed an additional $3 trillion coronavirus stimulus bill set for a vote Friday that includes aid for teachers, firefighters, and the postal service, as well as more checks to American households and a pay bump for essential workers. The bill is unlikely to get a vote in the Republican-controlled Senate.

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