U.S. jobless claims surge 70,000 to 281,000 in mid-March as coronavirus triggers layoffs
The numbers: The number of Americans who applied for unemployment benefits surged by 70,000 in mid-March to a 2- 1/2-year high as the coronavirus shut down large sections of the economy. And the worst is still yet to come with the crisis triggering waves of layoffs.
Initial jobless claims climbed to a seasonally adjusted 281,000 from 211,000 in the seven days ended March 14, the government said Thursday. That’s one of the biggest one-week increases ever and puts jobless claims at the highest level since September 2017.
Economists polled by MarketWatch had conservatively forecast a 220,000 reading, but said a much larger number was easily conceivable in light of the fast-moving crisis.
Employees are being laid off or furloughed in countless businesses. Some of the hardest hit include airlines, hotels, tourism agencies, retailers and restaurants.
New applications for unemployment benefits could soon surge to levels last seen during the worst of the 2007-2009 Great Recession, economists say. Weekly claims peaked at 655,000 in early 2009.
What happened: New applications for financial help rose the most in California and Washington, two of the states that experienced the biggest viral outbreaks early on.
Jobless claims are expected to crest much higher in the next month. A crush of new applications early this week briefly caused websites in states such as New York and Oregon to briefly seize up.
In Rhode Island, nearly 7,000 people filed new jobless claims on Monday, compared to just 160 on the prior Monday. Such dramatic increases are being reported all over the country.
Big picture: The total number of people collecting unemployment benefits in the first week of March stood near at just 1.7 million, but the current crisis could push them toward a 2008 Great Recession peak of 6.6 million if the economy remains under heavy duress for more than a few months and a deep recession ensues, analysts say.
The Trump administration has vowed not to let that happen by providing a massive $1 trillion-plus stimulus to help shield the economy amid efforts to contain the contagion, but large layoffs are inevitable. The big unknown is just how bad it will get.
What are economists saying? “Timelier reports of state-level data point to an unprecedented surge in layoffs over the next couple of weeks,” said senior U.S. economist Andrew Hunter of Capital Economics. “The more aggressive coronavirus containment measures imposed in recent days, involving the near total shutdown of the retail, leisure and travel sectors in some parts of the country, are clearly starting to have a dramatic impact on the labor market.”
Market reaction: The Dow Jones Industrial Average DJIA, 1.884% and S&P 500 SPX, 1.776% were set to open sharply lower in Thursday trades. The Dow fell sharply again on Wednesday and has tumbled some 10,000 points in the past three weeks.