Another week, another staggering number of people filing for unemployment benefits in the United States.
Some 2.98 million Americans filed initial jobless claims in the week ending May 9, the US Department of Labor reported on Thursday, pushing the total number of Americans who have lost their jobs in the wake of coronavirus lockdowns over the past two months to 36.5 million.
Though the weekly tally is slowing from a March peak of seven million, the latest figures nevertheless exceeded many analysts’ expectations.
Moreover, the weekly headline jobless claims number does not fully capture the historic stress sweeping the US labour market because it does not include self-employed and gig workers who only became eligible for unemployment benefits under the recently passed congressional virus-aid packages.
“The headline figures don’t tell the full story since they don’t capture individuals receiving benefits under state and emergency programs,” Oxford Economics chief US economist Gregory Daco wrote in a note to clients on Thursday.
But the numbers do signal that the worst carnage may be behind the US labour market as states and cities around the country slowly ease stay-at-home orders and allow some businesses to reopen.
“What the continuing claims figures and the insured unemployment rate are more reliably telling us is that the unemployment rate was close to peaking at the start of May, as the number of people returning to their jobs almost offset new job losers,” said Capital Economics chief US economist Paul Ashworth in a note to clients.
“With most states only beginning to ease their lockdowns within the last 10 days, we expect a much bigger swing in hiring versus firing over the next couple of weeks, which suggests the unemployment rate will begin to drop back,” Ashworth added.
Congress has provided nearly $2.9 trillion in fiscal help – or 14 percent of the US economic output – to cushion the economic blow that stay-at-home orders have visited upon American households, businesses, hospitals and state and local governments.
On Wednesday, Federal Reserve Chairman Jerome Powell warned during a webcast event that the outlook for the US economy is still riddled with uncertainty, and the country could be facing a prolonged downturn.
To help avoid painful outcomes, like a deep and protracted recession that could inflict significant long-term damage on US economic growth and household incomes, Powell said additional policy measures should be harnessed – including more government spending – if that is what it takes.
“Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” he said.