Economy

Weekly Jobless Claims Top 3.2 Million, and the Bad News Has Only Just Started

It was no secret that the number of jobless claims was going to be bad as the COVID-19 pandemic delivered an instant recession to the global economy. In fact, it was the worst of all time. The market has been used to seeing jobless claims in the low 200,000 handles for so long, and the prior week’s jump to 281,000 before being adjusted would have been alarming enough. However, with mass layoffs and furloughs, the week ending on March 21 saw a record jump of 3 million claims to 3.283 million.

Econoday had a consensus of more than a million and Bloomberg’s consensus was above 1.6 million. Goldman Sachs had warned that it could be in excess of 2 million jobless claims, and the BofA Securities estimate was closer to 3 million.

To benchmark this report against the prior records, the largest week ever was 695,000 claims from way back in 1982. During the financial crisis, the peak report was 665,000 jobless claims.

What is very sad about this report is that this will be very far from the last atrocious jobless claims report. Unemployment is going to skyrocket, and those continuing claims are likely to be atrocious for months, even if the economy gets started back up again in a matter of weeks.

The four-week moving average was 998,250, an increase of 765,750 from the previous week’s revised average. The previous week’s average was revised up by 250, from 232,250 to 232,500.

The continuing claims, which are reported with a one-week lag (March 14), was up 101,000 to 1,803,000, and it was the highest level for insured unemployment since April 14, 2018, when it was 1,824,000.

The Bureau of Labor Statistics report had a special note:

During the week ending March 21, the increase in initial claims are due to the impacts of the COVID-19 virus. Nearly every state providing comments cited the COVID-19 virus impacts. States continued to cite services industries broadly, particularly accommodation and food services. Additional industries heavily cited for the increases included the health care and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing industries.

Again, it was well known that was going to an atrocious report. That turned out to be an understatement, and even with a fiscal rescue package, these numbers likely will not look good for months, even under the best of recovery circumstances at this point.