The numbers: Almost 3.2 million people applied for unemployment benefits last week after the coronavirus cost them their jobs, but the historic wave of layoffs tied to the pandemic is receding.
The number of initial jobless claims processed in the week ended May 2 was less than half the crisis peak of 6.9 million at the end of March. The figures are seasonally adjusted.
Still, some 33 million new claims have been filed in seven weeks, a record-shattering surge that has sent the economy plunging into a deep recession from which it may take years for the U.S. to recover.
The number of new jobless claims are even higher if previously unqualified workers recently made eligible by a federal-relief program are counted. An additional 2.5 million people have applied for compensation though May 2 under the Pandemic Unemployment Assistance Program, but less than half the states have reported these figures.
A separate report by large payroll processor ADP on Wednesday said more than 20 million jobs were eliminated in April, at least temporarily. The federal government’s official employment summary is expected to show a similarly large wipeout when it’s released Friday morning.
All figures are seasonally adjusted.
What happened: The states of California, Texas, Georgia, Florida, and New York reported the biggest increases in new claims, according to the Labor Department. California, the largest U.S. state, has received the most jobless claims overall.
The number of people collecting unemployment benefits, known as continuing claims, climbed to 22.6 million as of April 25 from 18 million in the prior week. These figures are reported one week behind initial claims
The one-week lag in when new and continuing claims are reported, however, doesn’t fully explain the sizable gap between the two numbers.
Some people’s claims have been rejected, for one thing. More positively, an untold number of people may have returned to work or been put back on company payrolls, especially with some states starting to reopen their economies.
Still, there’s no sugar-coating the damage done. Just a few months ago, new jobless claims were in the low 200,000s and stood near a 50-year low. Only about 1.7 million Americans were collecting benefits and the unemployment rate was at a half-century low of 3.5%.
The big picture: The loss of so many jobs is bound to impair the economy for months and even years.
The federal government has sharply increased unemployment benefits, loosened eligibility standards and is effectively paying many companies to keep idled workers on payrolls until the crisis fades, but millions of jobs could be permanently lost as thousands of companies fail.
The bigger the damage to the labor market, the harder it will be for the U.S. economy to return to its pre-crisis level of growth.
What they are saying?: “That’s one in five jobs likely gone in seven weeks,” said Nick Bunker, director of economic research at Indeed Hiring Lab. “The outlook for the labor market remains frightening. Not only does the pace of layoffs remain at unprecedented levels, but hiring intentions remain depressed.”
Market reaction: The Dow Jones Industrial Average
and S&P 500
rose in Thursday trades. Stocks have rallied in fits and starts over the past week on the hopes that the economy will continue to reopen. Many states have slowly begun to relax restrictions.