WASHINGTON - A record 22 million Americans have sought unemployment benefits over the past month, with millions more filing claims last week, almost wiping out all the job gains since the Great Recession and underscoring the toll on the economy from extraordinary measures to control the novel coronavirus outbreak. Economists are predicting the economy, which they believe is already in recession, contracted in the first quarter at its sharpest pace since World War Two.
Employment bottomed at around 138 million in December 2010 and peaked at 158.8 million in February. At face value, the staggering claims numbers set the economy on course for job losses of more than 1 million in April. But a historic $2.3 trillion fiscal package signed by President Donald Trump last month made provisions for small businesses to access loans that could be partially forgiven if they were used for employee salaries.
«Claims have totaled 22 million, and claims will be in the millions again next week». Economists are divided on whether the second straight weekly decline in claims suggests filings peaked at a record 6.867 million in the week ended March 28, or that overwhelmed state employment offices were unable to process the flood of applications. Jobless claims, the most timely data on the economy’s health, are being closely watched for clues on the depth of the downturn, when the waves of layoffs may let up and when a recovery might start.
The Philadelphia Federal Reserve also reported that its measure of business conditions in the mid-Atlantic region dropped to a reading of -56.6 in April, the lowest reading since July 1980, from -12.7 in March. Economists are estimating the economy contracted as much as 10.8% in the first quarter, which would be the steepest drop in gross domestic product since 1947. They say the massive fiscal package will likely provide little cushion for the economy. «The economy is in a downward spiral where job losses beget job losses and the federal government emergency relief checks will not be enough to turn the tide,» said Chris Rupkey, chief economist at MUFG in New York.
«The recovery is looking less V-shaped by the day as the deeper we fall, the harder it will be for the nation to climb back out of this deep hole the pandemic has dug for the economy. » Economists say the economy entered recession in March. The so-called continuing claims data is reported with a one-week lag and is viewed as a better gauge of unemployment. Economists expect the unemployment rate in April will blow past the Great Recession’s peak of 10.0% and the post-World War Two high of 10.8% touched in December 1982.