A record number of Americans applied for jobless benefits last week as the impact of the coronavirus pandemic begins to make itself felt throughout the US economy. A staggering 3.283 million people filed for unemployment during the week ended March 21, far surpassing the previous record of 700,000 which occurred in 1982. The figure is far worse than any economic forecast, and adds to the 281,000 people who applied for benefits the week before.
- Jobless claims rose 3.2 million in the week ended Saturday March 21, compared to 281,000 the week before and surpassing the 1982 record of 700,000.
- Last week’s claims figure is over five times greater than the worst unemployment claims figures of the Great Recession.
- The true number of people who entered unemployment last week is likely far greater than 3.2 million.
The increase was due to services and businesses shutting down nationwide due to social distancing measures. Another factor is simply the lack of tourism and travel resulting from the global pandemic which has seen the EU, US, India, and other nations and regions close their borders.
Individual states reported government websites crashing due to the rush of people trying to file for benefits. In Pennsylvania, benefits rose 20 times from 15,439 to 378,908. New York figures were five times higher than the week before, rising from 14,272 to 80,334, while California figures tripled to 186,809. Louisiana, a hotbed for coronavirus infections, saw figures rise from 2,255 to 72,620. Nationally, the four-week moving average, which irons out weekly volatility, rose 27,500 to 1.731 million.
The True Figure is Much Higher
Last week’s figures, already dire, are likely to be much worse than reported. Individual contractors and business owners often are not eligible for unemployment benefits, and their loss of work will not be reflected in the figures shown last week.
The number of initial UI claims is most likely an underestimation of how much joblessness is rising, since not all workers who are laid off apply or are eligible for UI. A @BLS_gov analysis found that only 26% of workers who lost their job during 2018 applied for benefits. 3/7 pic.twitter.com/UlrENxD6RU
— Equitable Growth (@equitablegrowth) March 26, 2020
The true impact of the coronavirus pandemic will take some time to measure. Unemployment figures are likely to continue to reveal massive layoffs throughout the US economy in the coming weeks and months, and a recession of some kind now seems inevitable.
James McCann, senior global economist at Aberdeen Standard Investments., pointed out that economic statistics are incapable of capturing the full scope of the situation, but clarified that the situation is very serious.
“How sudden this decline has been, and how dramatic it’s been, really what we’re seeing through March is an economy go from relative good health to wide-scale contraction,” McCann said.
Former US Labor Department chief economist Heidi Shierholz pointed to flaws in the system given the current containment measures.
“Our unemployment insurance system has huge holes in it,” she said, adding that people are only counted as unemployed if they’re actively seeking work, a metric that does not apply when many businesses are forced to shut down by government mandate.
“You get laid off, you’re not allowed to look for work unless you’re in essential services because things are totally shut down. And so many people when they are asked by the survey takers, ‘Are you looking for work?’ they will honestly say, ‘No.’ ”
“This is a unique situation. People need to understand, this is not a typical downturn,” Federal Reserve Chairman Jerome Powell said Thursday morning on NBC’s “Today” show. “At a certain point, we will get the spread of the virus under control. At that time, confidence will return, businesses will open again, people will come back to work. So you may well see a significant rise in unemployment, a significant decline in economic activity. But there can also be a good rebound on the other side of that.”
Gold prices have seen some upward momentum following the release of the jobless claims data, although remain down on the day. Spot gold last traded at $1,630, down -0.14% with a high of $1,632.15/oz and a low of $1,599.00/oz. So far, gold has found resistance near $1,600 and remains buoyed up, partly due to the incredibly high jobless claims figures which spell difficult times ahead for many households and businesses throughout the country in the near-future and possibly beyond.