Coronavirus Led to Jobless Claims to Soar Past 3 Million
Last week, Americans affected by the coronavirus crisis filed unemployment claims in record numbers.
The Labor Department reported on Thursday a surge of 3.28 million in jobless claims.
The number shatters the Great Recession peak of 665,000 in March 2009, and the all-time mark of 695,000 in October 1982.
Also, last week, which mirrored the period before the worst of coronavirus hit, the number was 282,000. And this was way higher than expected at that time.
In addition to that, consensus estimates from economists surveyed by Dow Jones displayed an expectation for 1.5 million new claims. However, individual forecasts on Wall Street had been expecting a much higher number. The surge occurs amid a crippling slowdown due to the coronavirus crisis.
The four-week moving average smooths out weekly distortions. And it is at 1,731,000, adding 27,500 from the previous revised average last week.
Even though the news is worse than expected, the major stock indices started more than 2% higher, brushing off sharp earlier losses.
Charles Schwab’s vice president of trading and derivatives, Randy Frederick, stated, “This was way bigger than we thought and the market’s still moving higher.”
And according to Frederick, this might be an encouraging sign they may be in a bottoming process.
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Will There be an Economic Shutdown?
Most businesses across the country have shut down amid a policy of social distancing. This aims to stop the continuous spread of COVID-19. Also, each state has reported websites breaking amid the rush to file claims.
According to the founder and CEO of the LaSalle Network – a Chicago-based employment agency -, Tom Gimbel, they have known that this number would arrive within a week and a half.
He explained, “It doesn’t surprise me at all. When you see a city like Las Vegas get shut down, I don’t know what other options there were than seeing a number like this.”
They consider these jobless claims as the fastest window into current economic conditions. A lot of data reports in recent weeks reflect periods ahead of the worst of the coronavirus hit. And it has been showing the U.S. in relatively good shape towards the crisis.
Earlier Thursday, Federal Reserve Jerome Powell expressed how unique the situation has become. He noted, “People need to understand, this is not a typical downturn.”
Moreover, he indicated that at some point, they could control the spread of the coronavirus. During that time, confidence will go back, businesses will once again open, and people will be able to go back to work.
Powell remained positive amid the crisis, saying everyone might see a significant increase in unemployment and a massive decline in economic activity. He believes that there will be an excellent rebound on the other side of all of these.
Nevertheless, the near-term damage will surely be dramatic.
They published the jobless claims numbers a day after the Senate passed a $2 trillion plan in response to the pandemic. And this has been the most significant emergency relief package in U.S. history.
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