The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the coronavirus pandemic brought the country to a sudden halt.
Photo: AFP
The weekly jobless claims report from the Labor Department on Thursday offered the clearest evidence yet of the coronavirus' devastating impact on the US economy.
The crisis has forced the Federal Reserve to take take extraordinary steps and the US Congress to assemble a record $2 trillion stimulus package.
Economists say the economy is already in recession. Weekly claims are the most timely labor market indicator.
With nearly half the country's population under some form of a lockdown, economists are bracing for further increases in jobless claims.
"With partial lockdowns across the country leading to a sudden stop in economic activity, the US economy will experience the largest economic contraction on record with the most severe surge in unemployment ever," said Gregory Daco, chief US economist at Oxford Economics in New York.
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Initial claims for unemployment benefits rose 3 million to a seasonally adjusted 3.28 million in the week ending 21 March, eclipsing the previous record of 695,000 set in 1982, the Labor Department said.
The Labor Department attributed the surge to Covid-19, the respiratory illness caused by the coronavirus.
More than 1000 people in the United States have died from Covid-19, according to a running tally kept by Johns Hopkins University.
The department sectors affected were service industries, particularly accommodation and food service, health care and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing industries.
Mounting layoffs and a sinking economy have prompted President Donald Trump to push for businesses to reopen by Easter.
Given rising infections and a mounting death toll, many health experts, economists and politicians have argued against such a move.
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.
The pandemic has prompted governors in at least 18 states to order residents to stay mostly indoors. "Non-essential" businesses have also been ordered closed. According to economists, a fifth of the workforce is on some form of lockdown.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, jumped 2,647,034 to a record 2.90 million.
The unprecedented surge in jobless claims is all but certain to signal that a record streak of 113 months of US employment growth, dating to September 2010, came to an end this month.
Millions of job losses are likely in coming weeks," said Mark Zandi, chief economist at Moody's Analytics in West Chester, Pennsylvania. "There are numerous reports of laid-off workers unable to file for unemployment insurance because so many people are trying to file at the same time.
Thursday's claims report also showed the number of people receiving benefits after an initial week of aid increased 101,000 to 1.80 million, the highest since April 2018.
Read more about the Covid-19 coronavirus:
- How day one of the Covid-19 lockdown went
- Government clarifies essential services during lockdown
- Touching your Face: Why do we do it and how to stop
- Scientific hand-washing advice to avoid infection
- Coronavirus: A glossary of terms
- Reuters