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Thursday, June 4, 2020

Weekly jobless claims in the US soar near records

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WASHINGTON (Reuters) – The number of Americans applying for unemployment benefits in the past three weeks has likely totaled 15 million, as tough measures to control the new coronavirus epidemic suddenly pushed the country to stop, which which would confirm that the economy was in deep recession.

FILE PHOTO: People gather at the entrance to the offices of the New York State Department of Labor, which have closed to the public due to the epidemic of coronavirus disease (COVID-19) in the neighborhood of Brooklyn in New York, the United States, on March 20, 2020. / Photo taken on November 24, 2018 / REUTERS / Andrew Kelly

The Labor Department’s jobless claims weekly report on Thursday, the most recent data on the health of the economy, would bolster economists’ forecasts of job losses of up to 20 million in April. On Friday, the government announced that the economy had cut 701,000 jobs in March. These were the largest job losses since the Great Recession and ended the longest employment boom in U.S. history that began in late 2010.

“These dismal figures suggest another record jobs for April, a record,” said Beth Ann Bovino, chief US economist at S&P Global Ratings in New York. “America is now in a recession and, as it appears to be deepening, the question is how long will it take before the United States recovers.”

The number of initial claims for state unemployment benefits has likely slipped to 5.250 million seasonally adjusted for the week ended April 4 from 6.648 million, according to a Reuters survey of economists.

The expected decline should be due to the fact that the model the government is using to eliminate seasonal fluctuations shows a downward bias for last week’s data. States also appear to have difficulty handling high volumes of requests.

Survey estimates reached 9.295 million. According to average forecasts, last week’s claims data would bring cumulative unemployment claims to more than 15 million since the week ending March 21.

With more than 95% of Americans under orders to “stay at home” or “shelter in place,” reports continue to mount that state employment offices are overwhelmed by a barrage of requests. Mike Ricci, spokesperson for Maryland Governor Larry Hogan, wrote on Twitter on Wednesday that “we have about 1,000 calls to make every two hours,” noting that “currently, federal employees and those who have worked in more than one state cannot file online. ”

RANGES OF SWELLING UNEMPLOYMENT

Any moderation of claims last week would likely be temporary. The scope of business has closed due to stringent measures to curb the spread of COVID-19, the disease caused by the coronavirus, has spread from bars, restaurants and other social gatherings to transportation and factories. The United States has the highest number of confirmed cases of COVID-19 in the world.

Businesses also encourage their lowest paid hourly workers to apply for unemployment benefits in order to receive an additional $ 600 per week for up to four months. The improvement is part of a historic $ 2.3 trillion rescue package and builds on existing unemployment benefits, which averaged $ 385 per person per month in January.

This equals $ 15 an hour for a 40-hour work week. The federal minimum wage is approximately $ 7.25 an hour.

“The new federal payment of $ 600 alone still exceeds average recreation and hospitality income by almost 50%,” said Andrew Hunter, senior US economist at Capital Economics.

“This in turn may be part of the reason why jobless claims have exploded so rapidly in recent weeks. Workers may be more likely to accept temporary leave if they risk losing little income, and several large retailers cited the new provisions when they announced layoffs. ”

Thursday’s claims report should also show the number of people who continue to receive benefits after a first week of help, which reached 8.0 million in the week ending March 28, up from 3.029 million the week. according to the Reuters survey. This would wipe out the record of 6.635 million reached in May 2009.

The so-called continuous claims data are presented with a lag of one week and are considered a better measure of unemployment and its impact on gross domestic product.

“The job market has entered a traumatic period,” said Gregory Daco, chief economist in the United States at Oxford Economics in New York. “We expect the unemployment rate to reach 14% in April.”

The economy is estimated to have contracted sharply in the first quarter, even a historic drop in GDP is forecast for the second quarter. Economists say the economy went into recession in March.

The National Bureau of Economic Research, the private research institute considered to be the arbiter of American recessions, does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the basic rule in many country. Instead, it is looking for a drop in activity, spread over the entire economy and spanning more than a few months.

Report by Lucia Mutikani; Editing by Dan Burns and Chizu Nomiyama

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