Unemployment Claims in the U.S. Now a Doozy – Over 6.6 Million People Filed These Claims as Per the Latest Weekly Reading by the Labor Department
Unemployment claims in the U.S. are not usually a subject of hyper-interest among analysts, with the monthly non-farm payrolls report garnering the lion’s share of interest in this sphere. However, the current week’s claims data is all set to upend this regime. Analysts have termed the anticipated report a crucial barometer in gauging the breadth of economic deceleration that has gripped the U.S. amid expanding lockdowns and shuttering of businesses to combat the spread of the coronavirus (COVID-19) infections.
As per the tabulation by the United States Department of Labor in the weekly jobless claims report released moments ago, 6.648 million people in the U.S. filed for initial unemployment benefits in the week that ended on the 28th of March 2020, as opposed to a consensus forecast tabulated by CNBC of 3.1 million initial claims. This adds to the previous reading of 3.28 million initial claims for the week that ended on the 21st of March 2020.
As a refresher, this report covers two types of claims that are filed by jobless individuals with state unemployment agencies in order to secure unemployment benefits. The initial jobless claims comprise of people who are filing for the first time. On the other hand, continuing claims refer to the people who have been receiving unemployment benefits for some time.
Initial unemployment claims in New York – the current epicenter of the coronavirus pandemic in the United States – rose by 286,404 on a weekly basis. Similarly, these filings registered an increase of 692,394 in California during the pertinent week.
As the coronavirus cases continue to balloon in the United States, analysts have been trying to compute the ensuing financial damage. On Monday, the chief economist at Goldman Sachs (NYSE:GS), Jan Hatzius, published the latest estimates for the U.S. GDP and the unemployment rate:
“We now forecast real GDP growth of -9% in Q1 and -34% in Q2 in qoq [quarter-on-quarter] annualized terms (vs. -6% and -24% previously) and see the unemployment rate rising to 15% by midyear (vs. 9% previously)."
Hatzius goes on to note that if the U.S. economy were to shrink by more than a third in the second quarter of 2020, "it would represent a decline that is more than three times larger than the previous low in the history of the modern US GDP statistics."
However, Goldman Sachs does expect the second half of 2020 to be characterized by a sharp rebound in the economic activity in the Unites States, translating to a full-year 2020 GDP forecast of -6.2 percent on an annual average basis.
As far as the employment metric is concerned, Goldman has projected an increase of around 12 percent in the unemployment rate, hitting a zenith of 15 percent at the economic trough.
In order to dampen the economic fallout from the coronavirus pandemic and minimize general unemployment, the U.S. recently approved a gigantic $2 trillion aid package. As per the details, the package will expand unemployment benefits, provide cash payments to American families, extend financial assistance to businesses and local governments and deliver funding for hospitals and healthcare workers. You can read further details about this aid package by clicking this link.