Weekly jobless claims hit 5.245 million, raising monthly loss to 22 million due to coronavirus

Protection measures against the coronavirus continued to tear through the employment ranks, with 5.245 million more Americans filing first-time claims for unemployment insurance last week, the Labor Department reported Thursday.

That brings the crisis total to just over 22 million, nearly wiping out all the job gains since the Great Recession.

The total was a bit worse than the 5 million expected from economists surveyed by Dow Jones.

Though the most recent count, for the week ended April 11, represented a drop from the previous two weeks, it showed that the damage to the U.S. labor market remains profound.

“As we fully know the current state of the labor market with mass waves of layoffs, the key question turns to how many of these people will be rehired when the economy starts to reopen,” said Peter Boockvar, chief investment officer at the Bleakley Group. “We can assume it will take a long time for that to happen but hopefully we’re getting closer to at least getting started.”

The numbers of late have been bolstered by measures taken to allow more workers to file claims. They now include independent contractors and others who previously were not eligible for benefits.

Last week’s initially reported total of 6.606 million was revised up slightly to 6.615 million.

The four-week moving average, which during normal times is helpful in smoothing out weekly volatility in the numbers, jumped to 6.066 million, an increase of 2.568 million the previous week.

Stock market futures actually gained on the news and pointed to a slight gain at the market open.

There was some good news in the data when looking at the numbers not adjusted for seasonal factors, which some economists say is unnecessary given the current unusual conditions.

The unadjusted total was 4.97 million, actually representing a plunge of 20% or more than 1.2 million from the previous week. Seasonal factors actually should have reflected about a 1% gain, according to the Labor Department. A comparable week in 2019 would have shown just 196,364 claims.

Most of the big states showed declines from the previous week in benefit applications, according to unadjusted numbers.

Pennsylvania posted a drop of 39,283, California was down by 257,848 and Michigan fell by 169,234. New York, which has lagged some of the larger states in terms of filings, saw a gain of 51,498 to 395,949. 

The numbers come with an unemployment rate at 4.4% that does not come close to measuring the damage the coronavirus has had on the jobs market. Most economists expect the jobless level to be in the neighborhood of 10% when the April tally is completed, and there are forecasts it could rise above 15%.

The total claims of 22.03 million filed since social distancing measures took effect reflects a 13.5% drop in household employment, according to Paul Ashworth, chief U.S. economist at Capital Economics. Ashworth said he expects the April jobless rate to be 15%-20%.

“Nevertheless, we do still expect the unemployment rate to come down much more quickly than during a normal economic recovery, as temporary layoffs return to work once the lockdowns are lifted, so we still wouldn’t characterize this as a depression-type event,” he said.