As the pandemic continues to wreak havoc on the economy, more than 3 million workers in the United States filed unemployment claims during the week ending May 2, bringing the number to more than 33 million in the past seven weeks, which is around 22 percent of the workforce.
Meanwhile, the seasonally adjusted insured unemployment rate surged to a record high of 15.5 percent for the week ending April 25, making it the highest level of the seasonally adjusted insured unemployment rate in the history of the series. When the insured jobless rate hit 8.2 percent for the week ending April 4, it broke the previous record of 7.0 percent set in May 1975.
“The COVID-19 virus continues to impact the number of initial claims and insured unemployment,” the Labor Department said in the release.
Economists are growing increasingly worried that the breadth of the layoffs suggests unemployment could remain elevated even as many parts of the country start to reopen.
“Even with the economy slowly starting to reopen, the number of unemployed should continue to rise sharply as governments, as well as businesses that have tried but not succeeded at holding the line, are now laying off workers,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.
“The pace of new claims for unemployment is slowing, but remains at levels unimaginable just a few months ago.”
The number of continuing claims, which represents people receiving ongoing unemployment benefits, grew to a record 22,647,000, an increase of 4,636,000 from the previous week’s revised level of 18,011,000. This figure far exceeds the peak of 6.6 million continuing claims during the Great Recession.
“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” said Ahu Yildirmaz, co-head of the ADP Research Institute.
The sharp plunge in private payrolls suggests that the road to economic recovery may be steeper than previously believed.
“One thing for sure is that this pandemic health crisis has produced depression-magnitude job losses, which means this recovery is going to take longer than many are thinking,” said Chris Rupkey, chief economist at MUFG in New York.
“The Great Depression lasted 3 1/2 years, and it will be a miracle if the economy gets anywhere near back to normal within the next couple of years.”
Some argue, however, that April could mark the trough in job losses as more businesses access relief funds, especially those under the Paycheck Protection Program that lets firms not have to pay back loans if they don’t lay off workers.
Treasury Secretary Steven Mnuchin on April 26 said he expects the U.S. economy will “really bounce back” as lockdowns ease and people get back to work.
“And we are putting in an unprecedented amount of fiscal relief into the economy,” he said. “You’re seeing trillions of dollars that’s making its way into the economy, and I think this is going to have a significant impact.”
