The coronavirus pandemic has swelled America’s jobless ranks to an ominous new record.
New unemployment claims filed last week totaled 3.28 million, more than double the 1.5 million economists were expecting and a marked increase from the 281,000 the week prior, the U.S. labor department said. The unusual surge in new unemployment claims matches the severity of the unprecedented COVID-19 public health crisis, which has infected more than 64,000 and killed more than 1,000 people in the U.S., according to the Centers for Disease Control and Prevention.
As the virus continues spreading throughout the country, the number of new unemployment insurance claims is widely expected to rise in the coming weeks. Retailers that shut down brick and mortar for two weeks but promised to pay store associate wages, for example, may not be able to shoulder that responsibility much longer while much their revenue remains snuffed out. The longer stores remained sidelined, the likelier layoffs become as companies face the increasing urgency to preserve whatever liquidity they can.
Just this week, some states issued new orders to close non-essential services as they look to curtail the spread of COVID-19. Even restaurants that remain open in the era of social distancing are typically only allowed to sell food for delivery and take out.
“At a certain point, we will get the spread of the virus under control,” Federal Reserve Chairman Jerome Powell said during an interview Thursday morning on NBC’s “Today” show. Once confidence returns, businesses will re-open and workers will go back to work, he added.
The problem is that no one really knows when that will be, although projections based on the outbreak’s timeline in China, where it originated, suggests the U.S. might need to continue social distancing for eight weeks or so.
Former retail analyst Walter Loeb, who now works as a consultant, said that even after consumers begin to head back to work, there’s no guarantee that they will return to their old spending patterns. When consumers receive their checks from the federal government under the proposed $2 trillion stimulus plan, most are likely to “put it into savings” instead of spending it as officials hope, he said. Many won’t know when their jobs will come back, he added, and they’ll want to keep it in savings for food and necessities.
Already, the 3.28 million jobless claims for the week ended March 21 has far surpassed the 695,000 peak reached back in October 1982. Even during the Great Recession, the March 2009 peak of 665,000 pales in comparison to the devastation wreaked on the economy by COVID-19. The Department of Labor first began tracking new jobless claims in 1967.
Data on new unemployment insurance claims, which the Department of Labor first began tracking in 1967, is used as a metric to gauge the state of the U.S. economy.