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US Weekly Jobless Claims Seen Underscoring Deepening Economic Slump

Reuters

   WASHINGTON - Millions more Americans likely sought unemployment
   benefits last week, lifting total filings for claims over the past
   month above an astounding 20 million, which would underscore the
   deepening economic slump caused by the novel coronavirus outbreak.

   Thursday's weekly jobless claims report from the Labor Department will
   follow dismal data on Wednesday showing a record drop in retail sales
   in March and the biggest decline in factory output since 1946.

   Economists are predicting the economy, which they believe is already in
   recession, contracted in the first quarter at its sharpest pace since
   World War II.

   Weekly jobless claims, the most timely data on the economy's health,
   are being closely watched for clues on the depth of the downturn, when
   the waves of layoffs may let up and when a recovery might start.

   "The decline in economic activity is breathtaking," said Joel Naroff,
   chief economist at Naroff Economics in Holland, Pennsylvania. "While we
   will see an initial upturn once the economy reopens, the strength and
   length of that recovery is not clear at all."

   Initial claims for state unemployment benefits probably totaled 5.105
   million in the week ended April 11, according to a Reuters survey of
   economists -- a staggering number even though lower than the previous
   week's 6.606 million. Estimates in the survey were as high as 8
   million.

   Going by the average forecast, last week's claims data would bring the
   cumulative unemployment benefits claims to more than 20 million since
   the week ending March 21.

   Economists are divided on whether the anticipated second straight
   weekly decline in claims suggests that filings peaked at a record 6.867
   million in the week ended March 28, or that overwhelmed state
   employment offices were unable to process the flood of applications.

   "We expect that claims will remain very elevated in coming weeks as
   states struggle to clear backlogs and more companies lay off workers in
   response to the shutdown," said Joseph Briggs, an economist at Goldman
   Sachs in New York.

   "Including this week, we currently project an additional 20 million in
   initial jobless claims through the end of May, after which we expect
   new claims to fall to levels consistent with prior recessions."

   Economic carnage

   States and local governments have issued "stay-at-home" or
   "shelter-in-place" orders affecting more than 90 percent of Americans
   to control the spread of COVID-19, the respiratory illness caused by
   the virus, and abruptly halting economic activity. Retail sales and
   production at factories tanked in March.

   Economists are estimating the economy contracted as much as 10.8
   percent in the first quarter, which would be the steepest drop in gross
   domestic product since 1947. They say a historic $2.3 trillion fiscal
   package, which made provisions for cash payments to some families and
   boosted unemployment benefit checks, will likely provide little cushion
   to the economy.

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