Thursday's weekly jobless claims report from the Labor Department will provide the clearest evidence yet of the devastating impact of the coronavirus on the economy, forcing the Federal Reserve to take extraordinary measures and prepare the United States Congress to Gather a record $ 2 trillion stimulus packages.
Economists say the economy is already in recession and the unemployment claims report would offer proof of this.
Weekly claims figures are the most timely indicator of the labor market. Thursday's report will draw attention to both Wall Street and Main Street after the Trump administration requested that states stop giving daily snapshots of jobless claims.
According to a Reuters poll of economists, initial claims for state unemployment benefits likely rose to a seasonally adjusted million for the week ending March 21, which would far overshadow the previous record of 695,000 set in 1982. Estimates in the The survey was as high as 4 million, which would dwarf the 281,000 requests received during the week ending March 14.
"Containment efforts in response to the coronavirus resulted in a very sudden and dramatic change in just a few days," said Stephen Gallagher, chief US economist at Societe Generale in New York. "The layoffs were part of that change, and the applicants appear to have flooded state unemployment insurance offices in a very short period of time."
(FIGURE: Unemployment Benefits Increase – here)
There were reports from many states that their job websites collapsed due to heavy traffic.
Governors in at least 18 states, representing nearly half of the country's population, have ordered residents to stay primarily in the interior. "Non-essential" companies have also been ordered closed. According to economists, a fifth of the workforce is under some form of blockade.
Collecting raw data from state economists, industry groups, and their own models show an unprecedented leap across states.
Morgan Stanley forecasts unadjusted claims for California, one of the harshest regions for the coronavirus-caused respiratory illness called COVID-19, which skyrocketed to 550,000. California Governor Gavin Newsom said earlier this week that new claims for unemployment benefits were running at an average of 106,000 per day last week.
According to Morgan Stanley estimates, claims from New York, now at the center of the outbreak, are projected to have increased by 210,000. Applications in Washington state are expected to have increased by approximately 100,000.
With state employment websites overwhelmed, economists say some of the applications that were supposed to be filed during the week ending March 14 were delayed to last week, which could also explain the anticipated rise in claims. .
"Additionally, reports from some states also suggest that the claims-making process has been changed in part to a pen-and-paper approach, which may also delay the filing process," said Jan Kozak, economist at Morgan Stanley in New York. "This means that some of the 3.4 million claims we estimate could have been extended this week as well."
Last week's claims data will likely have no impact on the March employment report, as it is outside the period during which the government surveyed employers for non-farm payrolls, which was the week through 14 of March. However, economists say the rush for benefits in that week of the survey suggests that payrolls declined this month, ending with almost 9 and a half years of job growth.
"Jobs will decrease in March," said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania. “There are numerous reports of laid off workers who cannot apply for unemployment insurance because many people are trying to do it at the same time. Millions of jobs are likely to be lost in the coming weeks. "
Additional reports from Ann Saphir in San Francisco; Edition of Dan Burns, Andrea Ricci and Chizu Nomiyama
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