2.1M more Americans file for unemployment, bringing 10-week total to more than 40 million amid coronavirus
The number of Americans struggling to make ends meets continues to grow, even as the economy begins to restart after virtually shutting down to slow the coronavirus pandemic.
About 2.1 million Americans filed initial unemployment benefit claims last week, the Labor Department said Thursday
In just ten weeks, 40.7 million have sought jobless benefits which represent the nation’s most reliable gauge of layoffs.
The volume of claims has been steadily slipping. The latest claims tally fell below the 2.4 million who filed claims the week before, and the record 6.9 million who sought assistance in late March.
And that rend is expected to continue. Economic research consultancy Pantheon Macroeconomics predicts initial unemployment applications could fall below 1 million by the end of next month, “for the first time since mid-March.''
But the number of claims is still immense, reflecting a 14.7% jobless rate that is the highest since the Great Depression.
Oxford Economics expects the jobless rate to continue to grow, reaching roughly 20% in May before slowly declining, though it will likely still be in double digits by the end of 2020.
"Even though we look for the economy to recoup 17 million jobs this year, or 60% of lost jobs, the unemployment rate will still be around 10% by year-end,'' Oxford said in a note.
The flood of jobless claims is so great, overwhelmed state systems have struggled to process the millions of applications. While the backlog is easing, it is still significant, says Andrew Stettner, senior fellow at The Century Foundation.
"The percentage of all claims being paid jumped from just 14% by the end of March to 47.3% by the end of April, a big improvement, but still reflecting major delays in payments that have bedeviled state agencies and frustrated millions of workers,'' Stettner said in a statement.
As the country gradually begins to reopen, with restaurants, barbershops and other businesses welcoming back customers, a rebound could be on the horizon, economists say.
"Tentative signs of economic stabilization are ... beginning to emerge,'' Ksenia Bushmeneva, an economist with TD Economics, said in an investors note. "However, the economy is still in a very deep hole, ... While the worse in terms of shutdowns is likely in the rear-view mirror, navigating the economy out of the crisis will take some time as the rate of recovery will differ across states and industries.''
In the early weeks of the pandemic, the retail, hospitality and leisure sectors were hardest hit as residents were told to stay home, retailers and restaurants closed, and travel virtually stopped. Those industries may be slow to regain their footing, Bushmeneva said, "leading to permanent job losses.''
Oxford Economics agreed that some short term job cuts could be long lasting. "While many workers will likely be recalled once lock downs are relaxed,'' it said, "depressed income and spending, lingering virus fear, and mandated capacity restrictions will likely mean half of all temporary layoffs could become permanent.''