More than 3 million people filed a claim for unemployment benefits last week in the US as the COVID-19 pandemic closed businesses, cities and entire American states.
According to a weekly report from the US labour department – it was “the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series.” The previous high was 695,000 in October of 1982.
All up claims rose to a record high of 3.28 million for the week ending Saturday, March 21, from a revised 282,000 the previous week (281,000 originally) and 215,000 a year ago.
The news saw Wall Street rise because investors were encouraged the terrible report will put more pressure on Democrats to pass the $US2 trillion emergency support package tonight and release hundreds of billions of dollars to American businesses (many S&P 500 companies) and save their bacon and that of their employees.
Australian investors think along the same lines because the ASX is heading for another up day and week with the futures showing an opening gain of around 140 to 150 points just after 5 am.
The report shows the staggering scale of job losses in the first full week of claims since parts of the country began to restrict public gatherings and, in some cases, order residents to stay home.
And next week will see another surge as California this week reported a one million rise in initial jobs claims, but only of 186,809 claims filed by March 21. Still, that was treble the week before’s 57,606 which confirms next week’s report will show another multi-million dollar rise.
The rise also dwarfed the peak of 665,000 in applications during the 2007-2009 recession, during which 8.7 million jobs were lost.
With the US House of Representatives expected to vote on the $US2 trillion stimulus/support bill tonight, our time, economists say the jobs report shows the economy is already in recession.
Weekly claims are the most timely labor market indicator, giving a near-instant snapshot of the strength of activity, especially in key sectors like retail, manufacturing and building and construction.
Job losses last week were concentrated in the accommodation and food service, health care and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing industries.
Fed Chair Jerome Powell said on Thursday in an interview on NBC’s “Today” show that the economy “may well be in recession” but progress in controlling the spread of the coronavirus will dictate when the economy can fully reopen.
President Trump wants that to happen from April 12, which is Easter, which will be difficult with possibly up to 8 million people unemployed.
The March jobs data is out a week tonight and will show a surge back towards 5% in the jobless rate from 3.5% in February.
Other data out on Thursday showed the US economy grew at a 2.1% annual rate in the fourth quarter, unchanged from the two preceding estimates.
The Commerce Department also reported a 9.1% plunge in the goods trade deficit to $59.9 billion in February, as well as declines in wholesale and retail inventories, as the coronavirus helped to depressed imports. That’s another sign of an impending economic slump.