Hundreds of thousands or even millions of people losing their jobs? Unemployment spiking to Great Recession levels or higher? The mounting damage to the economy from the coronavirus is about to become starkly visible.
States around the country are reporting a massive surge in the number of people applying for jobless benefits. In just the past week, the number of searches on Google for unemployment benefits has also skyrocketed.
The incoming evidence suggests initial jobless claims could soon triple from the low 200,000s. Neil Dutta, head of macroeconomics at Renaissance Research, calculates that new jobless clams could climb to as high as 650,000 in the next few weeks based on the spike in Google searches.
If so, new claims could match the highest levels of the Great Recession. New jobless claims peaked at 655,000 in March 2009.
New claims and a slew of other economic reports over the next several weeks will start to provide a fuller picture of the coronavirus crisis, starting with Thursday’s update on how many Americans sought unemployment benefits in mid-March.
The following week will reveal how Americans have reacted to the unprecedented disruptions in their lives though the March reports on consumer confidence and consumer sentiment.
Then in early April comes the big one: The monthly employment report.
It’s possible the U.S. could post the first decline in jobs since 2010 and break a string of 113 straight months of increases. But a negative reading is more likely in April than in March. The government’s survey for March was mostly completed before in the early part of the month before the coronavirus crisis exploded.
Until this week, virtually all of the economic reports tracked most closely by Wall Street have covered January and February, when the coronavirus had hardly any effect on the economy.
Now the damage reports are beginning to flood in. Some states such as New York and New Jersey have already announced a big increase in people applying for unemployment benefits. Rhode Island, for example, said nearly 7,000 people filed new jobless claims on Monday, compared to just 160 on the prior Monday.
“We are seeing a skyrocket in our unemployment insurance claims,” Gov. Gina Raimondo said.
If those numbers are duplicated around the country, new claims could soar past 300,000 on Thursday for the first time since 2015. Just 10 months ago, they touched a 50-year low of 193,000.
“I think we are going to see a significant spike tomorrow,” said Richard Moody, chief economist at Regions Financial. “It could be an unsettling number.”
Whether it gets worse than that will depend on how quickly the federal government moves to supply aid to the thousands of businesses and millions of workers that have been harmed by large parts of the economy shutting down.
