Initial jobless claims soared by another 3.8 million in the week ended April 25, above the expected figure of 3.5 million claims. Last week’s figures are down from the week before which registered 4.44 million claims. In the last six weeks, over 30 million Americans have lost their jobs due to the coronavirus pandemic still sweeping the nation.
- 3.8 million Americans filed for jobless benefits last week vs. 3.5 million expected and 4.4 million the week before.
- The insured unemployment rate has reached a record 12.4% vs. just 1.2% before the outbreak.
- The rate of true unemployment is likely far higher.
The labor market continues to shed millions of jobs amid the ongoing coronavirus lockdown procedures forcing businesses to shut down and citizens to remain indoors around the country. Florida saw the most claims in the week ended April 25 at approximately 432,500, followed by 328,000 in California and 264,800.
Most states reported declines, and the rate of claims nationwide has been dropping since its peak in March. Some of the claims processed last week were likely backlogged, as many state websites have been suffering intermittent outages due to the high volume of applicants overwhelming local infrastructure.
— Thomas Costerg (@TCosterg) April 30, 2020
The Wall St. Journal reports that “many states’ unemployment benefit systems are hamstrung by archaic, decades-old technology. Coping with relief legislation that provides an additional $600 a week in benefits and making independent contractors such as Uber drivers eligible has created additional strains.” Hundreds of thousands of Americans are still waiting for benefits, placing many people in an even more precarious financial situation.
Wider Economic Impact
The collapse of the labor market is only one aspect of the wider impact the pandemic is having on the economy. Q1 GDP figures showed that the US has entered a recession, with 4.8% contraction due to the coronavirus pandemic which only struck in the last few weeks of Q1.
Economists expect that the true figure will prove to be much higher for Q1 when revised, and that the Q2 GDP results will show the worst contraction in the history of the US. Nonfarm payrolls are expected to lose 2.25 million jobs with an unemployment rate of 15% likely on the way.
Gold prices have ticked downward following the news, which was relatively in-line with expectations. Spot gold last traded at $1,701.56/oz, down -0.73% with a high of $1,721.19/oz and a low of $1,699.18/oz. Inflation pressure has eased off slightly according to the latest PCE report, and this may have led to reduced short-term demand for gold.