Millions more Americans likely sought unemployment benefits last week, lifting total filings for claims over the past month above an astounding 20 million, which would underscore the deepening economic slump caused by the novel coronavirus outbreak. Thursday’s weekly jobless claims report from the Labor Department will follow dismal data on Wednesday showing a record drop in retail sales in March and the biggest decline in factory output since 1946.
Economists are predicting the economy, which they believe is already in recession, contracted in the first quarter at its sharpest pace since World War II. Weekly jobless claims, the most timely data on the economy’s health, are being closely watched for clues on the depth of the downturn, when the waves of layoffs may let up and when a recovery might start. Initial claims for state unemployment benefits probably totaled 5.105 million in the week ended April 11, according to a Reuters survey of economists — a staggering number even though lower than the previous week’s 6.606 million. Estimates in the survey were as high as 8 million.
Going by the average forecast, last week’s claims data would bring the cumulative unemployment benefits claims to more than 20 million since the week ending March 21. Economists are divided on whether the anticipated second straight weekly decline in claims suggests that filings peaked at a record 6.867 million in the week ended March 28, or that overwhelmed state employment offices were unable to process the flood of applications.
Economists are estimating the economy contracted as much as 10.8% in the first quarter, which would be the steepest drop in gross domestic product since 1947. They say a historic $2.3 trillion fiscal package, which made provisions for cash payments to some families and boosted unemployment benefit checks, will likely provide little cushion to the economy.
The National Bureau of Economic Research, the private research institute regarded as the arbiter of U.S. recessions, does not define a recession as two consecutive quarters of decline in real GDP, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.
Source: Reuters
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