WASHINGTON, March 26, 2020 (BSS/AFP) – With streets in major cities barren,
and shops and restaurants forced to close due to the coronavirus pandemic,
economists warn of a record explosion of Americans filing for unemployment
benefits.
The Labor Department on Thursday will release its weekly data on first-time
applications for jobless benefits covering the week ending March 21 — the
first to show the epidemic’s impact on the US economy.
“Whatever the number, it will be horrific,” said Ian Shepherdson of
Pantheon Macroeconomics.
The data have been mundane for the past two years amid a very strong US
labor market, but the situation has changed for this lowly report on the
frontlines of the virus fallout.
Last week’s report showed jobless claims surged to their highest level
since September 2017, especially with a jump in applications from hotel and
restaurant workers.
But that was just the tip of the iceberg.
“The consensus for today’s first post-apocalypse jobless claims number (1.5
million), looks much too low,” Shepherdson said, adding that he is expecting
a staggering 3.5 million.
White House economic adviser Larry Kudlow acknowledged the report would
show a jump, but said the market is expecting it.
“It’s going to be a very large increase,” he said on Fox Business Network.
But economists cautioned that forecasting data in unprecedented times is
dicey at best.
The models “are based on prior experience and we have no prior experience
of an economy that has largely been shut down,” said Rubeela Farooqi of High
Frequency Economics.
“These are extraordinary times that will result in extraordinary outcomes.”
Reports from states and even data on Google searches show that unemployment
offices have been overwhelmed in recent days and may have to estimate their
totals.
Shepherdson noted that New York alone reported receiving 1.7 million calls
last week, “though it’s not clear if all of these calls led to a formal
claim.”
Economists are projecting the pandemic’s shutdown could lead to a
staggering 14 percent contraction of the US economy, and the Conference Board
on Wednesday said unemployment could rise to as high as 15 percent later in
the year — far beyond the 10 percent peak hit in October 2009 during the
global financial crisis.
Congress is pushing through a massive $2 trillion rescue package to dampen
the blow to the economy, which includes a huge expansion in unemployment
insurance, boosting the weekly payment by $600 and extending the benefits to
workers who would not normally qualify.