Economic Report: Jobless claims climb by another 3 million amid coronavirus shutdowns

More than 36 million people have applied for jobless benefits since the pandemic struck two months ago, including self-employed workers and independent contractors made eligible for the very first time under a federal relief program.

Small businesses like this Thai restaurant in Washington, D.C., are trying to reconfigure their businesses during the pandemic and avoid layoffs, but most companies have had to slim down, and tens of millions of Americans have lost their jobs during the crisis.

Getty Images

Some 33 million have applied under existing state unemployment laws, while at least 3 million have filed claims under the federal government’s Pandemic Unemployment Assistance Program. These figures are unadjusted, reflecting the actual number of claims processed.

Not all of these employees are still out of work. Some have been called back to their jobs in industries deemed essential. Others have returned to their jobs as many states reopen parts of their economies, particularly in less populated areas where the coronavirus is mostly absent.

Yet the unemployment rate has likely reached 20% unofficially, government data suggest, and it’s likely to rise again in May.

Read:The record number of people applying for jobless benefits is even worse than it looks

What happened: The mind-numbing torrent of weekly layoffs has tapered off from a pandemic peak of 6.9 million at the end of March, but the economy cannot afford to keep losing several million jobs a week. Many states are trying to reignite their economies, but so far it’s been slow going.

See:States start to reopen, ending coronavirus lockdowns: Wisconsin top court strikes down stay-at-home order

Last week the states of Florida, California, Georgia, Texas and New York reported the most new jobless claims, according to the Labor Department.

Lots of states are still underreporting new unemployment claims, however, likely because of antiquated computer systems and small staffs that have been unable to handle the crush of applications. It may be some weeks before they are caught up.

As of May 2, roughly two-thirds of all the people who’d filed new claims during the pandemic were receiving benefits, though exact numbers are hard to come by given disparities in how the states and the federal government report the data. Continuing claims are reported with a one-week lag.

The true number of people who are out of work is not known. Last week the government said 20.5 million workers lost their jobs in April, but the number is almost certainly higher.

Before the viral outbreak, new jobless claims were in the low 200,000s each week and stood near a 50-year low. Only about 1.7 million Americans were collecting benefits, and the unemployment rate was at or near a half-century low of 3.5%.

Read:Expanded unemployment benefits: Who qualifies, how to apply

The big picture: The economy appears to be close to bottoming out, but it’s facing a long road back to recovery despite trillions of dollars in federal spending to cushion the blow.

Millions of jobs thought to be temporarily at risk might end up permanently destroyed, retarding any economic rebound. And as long as the coronavirus replicates and resists treatment, the economy cannot return to its old patterns.

Read: Why the economy’s recovery from the coronavirus is likely to be long and painful

Also:It’s ‘wishful thinking’ to believe the economy will get back to normal soon, says winner of MarketWatch Forecaster of the Month contest

What experts are saying: “Layoffs are abating, but remain extremely high,” said chief economist Gus Faucher of PNC Financial Services. “After job losses of 20.5 million in April, by far the worst month in history, May job losses will also be in the millions.”

Market reaction: The Dow Jones Industrial Average DJIA, -0.46% and S&P 500 SPX, -0.60% were opened lower in Thursday trades. The Nasdaq Composite COMP, -0.95% suffered an early triple-digit loss.

Stocks had been creeping higher in the past few weeks as states move to reopen their economies, but they fell on Wednesday after Federal Reserve Chairman Jerome Powell offered a bleaker outlook on how long it will take to recover.

Also see:Dow ends 516 points lower on Wednesday as Fed’s Powell says economic outlook ‘both highly uncertain and subject to significant downside risks’

Original Source: