The unemployment rate in the US has been affected by the coronavirus outbreak.
The impact of the coronavirus outbreak on the umployment rate in the US has been severe. The number of Americans filing for unemployment benefits has reached 3.283 million for the week ended March 21.
Data showed that consensus expectations were for 1.64 million claims. Meanwhile, previous data was 695,000 claims recorded the week ended October 2, 1982.
Initial jobless claims for the week ended March 14 rose to 282,000 from 281,000. This was considered the largest single-week increase in unemployment rate since the Great Recession.
"Millions of Americans are filing for benefits, and that means the economy is not just staring down at the abyss, it has fallen off the cliff and down into the depths of recession,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in an email Thursday.
“How far it goes is anyone's guess, but certainly close to 10 million people are out of work, and this means the official unemployment rate will match the 10% threshold of pain reached in the 1981-82 and 2007-09 recessions.”
“In previous deep recessions, most notably in 2008 and 1980, initial claims during the worst four weeks of the recession would total 2 [million],” Nomura economist Lewis Alexander wrote in a note to clients March 22.
“That is consistent with the shock from COVID-19 compressing a significant deterioration in the labor market into a much shorter period relative to previous contractions.”
Economists at Citi predicted that claims would reach four million. Meanwhile, UBS economists claimed that the tally would be at 860,000.
“Early state reports this week indicate initial claims for the week ended March 21 will rocket well over one million next week—and possibly as high as three million,” Wells Fargo wrote in a note March 20.
“That would surpass anything we saw during the financial crisis and could be upwards of three times the all-time high in claims set back in 1982. This will shock even the most bearish forecasters. As economic activity is grinding to a halt, the U.S. economy is quickly catapulting into a recession.”
Meanwhile, the Congress passed a $2 trillion disaster aid bill that aims to combat the effects of the coronavirus pandemic. This includes direct payments of $1,200 to most American adults and aid to help small businesses pay workers.
