- Jobless claims further surged last week, doubling from 3.3 million to 6.6 million for the week that ended on March 28th. This was above and beyond what markets had expected (+3.1 million).
- States reported a broad-based decline in employment across industries, with accommodation and food services leading the way. An increasing number of states pointed to job losses in retail and wholesale trade, as well as construction industries. Health care and social assistance and manufacturing industries also saw employment declines.
- For the previous week (week ended March 21), the largest increases in jobless claims by state were in Pennsylvania (+362,012), Ohio (+189,263), Massachusetts (+141,003), Texas (+139,250), and California (+128,727).
Key Implications
- Wow. The unprecedented rise in jobless claims hit another record last week, displaying the raw impact COVID-19, and the measures to combat it, is having on the economy. Unemployment filings keep piling up in the U.S. as the list of states issuing “stay-at-home” orders continues to grow. More than half of U.S. states have enacted lockdown protocols, with Florida joining the mix yesterday.
- Jobless claims are likely to remain elevated in the weeks ahead. Big chains have announced they will lay off tens of thousands of workers despite the Coronavirus Aid, Relief, and Economic Security (CARES) Act which brought forward $2 trillion of aid to the U.S. economy. While the funding package provides monetary support to households and small to medium sized enterprises, large retailers clearly still need to lay off workers to keep the lights on.
- As we have written in a previous report, a surge in jobless claims will bring with it record unemployment rates. If claims remain at 6.6 million per week in April, the unemployment rate could reach 20% for the month. Regrettably, with layoffs coming in at an extraordinary pace, this outcome appears increasingly likely.
