- Economists are predicting a massive spike in US weekly jobless claims this week amid coronavirus-induced layoffs.
- Estimates range from 1 million to 4 million jobless claims for the week ending March 21. The low end of that range would be a more than three-fold increase from last week’s number.
- “This is happening at a pace and a scale that our brains can’t comprehend,” Martha Gimbel, an economist at Schmidt Futures, told Business Insider in an interview.
- Read more on Business Insider.
New US labor market data set to be released this week will give an early indiction of just how much the coronavirus pandemic is damaging the economy.
On Thursday, weekly US jobless claims data will be released for the week ending March 21. Economists are anticipating that the report will show a massive increase in the number of people filing for unemployment insurance as the first wave of coronavirus-induced layoffs hit.
Estimates from major firms range from roughly 1 million to as much as 4 million jobless claims for a single week in March.
A number anywhere in that range would be a new record, surpassing the current peak spike of nearly 700,000 new unemployment claims added in one week in 1982. It would also be a more than three-fold increase from claims filed previously; for the week ending March 14, jobless claims jumped to 281,000, a two-year high, and far exceeded economists estimates.
A number of states specifically cited COVID-19-related layoffs, the Department of Labor wrote in last week’s report. In addition, “many states reported increased layoffs in service related industries broadly and in the accommodation and food services industries specifically, as well as in the transportation and warehousing industry, whether COVID-19 was identified directly or not.”
The upcoming report is slated to show even further damage, as it will capture a week where states began to practice extreme social distancing measures and shutdown schools, restaurants, and workplaces to curb the spread of the virus.
“This is happening at a pace and a scale that our brains can’t comprehend,” Martha Gimbel, an economist at Schmidt Futures, told Business Insider in an interview. “The numbers are literally unbelievable.”
To make matters more stark, Gimbel says weekly claims are actually an undercount of economic pain, because not everyone qualifies for unemployment. They also don’t include workers who have had hours cut due to the coronavirus-induced slowdown, people who are self-employed, and even those unable to file due to the unemployment website crashing from overuse.
The uncertainty around this week’s number is higher than usual due to the sharp and sudden impact of the coronavirus pandemic, Michael Gapen, the chief US economist at Barclays told Business Insider. The two most recent peaks in jobless claims – in 1982 and 2008, during the financial crisis- were much more gradual, he said.
“We’re making an educated guess with the anecdotal evidence that we have,” he said. “We think we’re going to see a lot of layoffs.”
To build out their estimates for this week’s claims, economists have been watching state-level news reports. The Economic Policy Institute also included an enriched model that incorporated state-level changes in Google Trends search interest for “file for unemployment” to reach its estimate.