The number of Americans filing claims for unemployment benefits likely shot to a record high for a second week in a row as more jurisdictions enforced stay-at-home measures to curb the coronavirus pandemic, which economists say has pushed the economy into recession.
Thursday’s weekly jobless claims report from the Labor Department, the most timely data on the economy’s health, is expected to show that claims blew past the previous week’s record 3.3 million. It will likely reinforce economists’ views that the longest employment boom in U.S. history probably ended in March.
More than 80% of Americans are under some form of lockdown, up from less than 50% a couple of weeks ago, leaving state employment offices overwhelmed by an avalanche of applications.
The United States has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the virus, with nearly 188,000 people infected. Almost 4,000 people in the country have died from the illness, according to a Reuters tally.
“The U.S. labor market is in free-fall,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York. “The prospect of more stringent lockdown measures and the fact that many states have not yet been able to process the full amount of jobless claim applications suggest the worst is still to come.”
Initial claims for state unemployment benefits probably raced to a seasonally adjusted 3.50 million for the week ended March 28, according to a Reuters survey of economists. Estimates in the survey were as high as 5.25 million.
Claims data for the week ended March 21 is likely to be revised higher as many state employment offices reported challenges processing applications. Applications for unemployment benefits peaked at 665,000 during the 2007-2009 recession, during which 8.7 million jobs were lost.
Economists say the country should brace for jobless claims to continue escalating, partly citing generous provisions of a historic $2.2 trillion fiscal package signed by President Donald Trump last Friday and the federal government’s easing of requirements for workers to seek benefits.
As a result, self-employed and gig-workers who previously were unable to claim unemployment benefits are now eligible. In addition, the unemployed will get up to $600 per week for up to four months, which is equivalent to $15 per hour for a 40-hour workweek. By comparison, the government-mandated minimum wage is about $7.25 per hour and the average jobless benefits payment was roughly $385 per person per month at the start of this year.
“Why work when one is better off not working financially and health-wise?” said a Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles.
Aware of her elements, Neha writes the best articles across industries including electronics & semiconductors, automotive & transportation and food & beverages. Being from the finance background she has the ability to understand the dynamics of every industry and analyze the news updates to form insightful articles. Neha is an energetic person interested in music, travel, and entertainment. Since past 5 years, she written extensively on sectors like technology, finance and healthcare.
Smarter Decisions with Smart News
Smart Market News is committed to getting its readers the latest updates and insights on industries that help in making “smarter” business decisions. With insights and inputs from corporate decision makers, we bring you the stories of adopting innovative solutions and strategies that have been changing the world. Our editorial insights on products, solutions, companies, and adoption of best practices not only help in understanding the markets better, but also prove to be a complete package for your information needs.