The numbers: The number of Americans who applied for unemployment benefits last week soared by a record 6.6 million, bringing the increase in new jobless claims in the last two weeks of March to 10 million as the all-out effort to slow the coronavirus slammed the economy.
Countless businesses across the country have been forced to close or scale back hours, throwing masses of people out of work and triggering an unprecedented back-to-back surge in initial jobless claims. New claims are likely keep climbing in the next few weeks as the damage unfolds.
In just the past two weeks alone, new claims have easily exceeded the peak number of people who collected benefits during the 2007-2009 recession. A then-record 6.6 million people drew benefits at the tail end of the last recession.
Soon the clutch of unemployed Americans is likely to surpass the prior record of 15.3 million, also seen during what has become known as the Great Recession. Economists predict 25 million Americans or more could lose their jobs in the next few months, at least temporarily.
Large parts of the U.S. economy are closed for business, throwing millions of Americans out of work.
What happened: Initial jobless claims jumped by a seasonally adjusted 6.65 million from an upwardly revised 3.34 million in the prior week, the Labor Department said. The increases in both weeks easily shattered the prior one-week record of 695,000 in October 1982.
Just a month ago, new claims were in the low 200,000s and sat near a half-century low.
The astonishing increase in new claims suggests the unemployment rate shot up to around 10% at the end of March from an official 3.5% rate in February that marked a 50-year low. Never before has the unemployment rate risen so much so quickly.
The states recording the biggest increases last week were California (692,394) and New York (286,404), based on unadjusted data.
The level of claims might still be underestimated, though. Some states continue to have trouble handling the huge influx of applications. Their small staff and computers systems have been overwhelmed after years of exceeding low claims.
Big picture: The stunningly large increase in new claims clearly shows just how much damage the pandemic has done to the U.S. economy. The federal government is rushing to distribute more than $2 trillion in relief to businesses and households and provide a lifeline for the economy.
It might not be enough, but it will help the economy in the short run. Millions of Americans who have lost their jobs or been furloughed might even get more money from unemployment benefits than they would have gotten in wages under their old jobs.
What they are saying? “From extremely bad to even worse,” said senior economist Andrew Grantham of CIBC World Markets, adding that the unemployment rate is likely to exceed 10% in the near future.
Market reaction: The Dow Jones Industrial Average DJIA, -4.44% and S&P 500 SPX, -4.41% were set to open higher in Thursday trades. Stocks have been badly battered over the past month. The 10-year Treasury yield TMUBMUSD10Y, +2.63% edged up to 0.59%.