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4.4 million unemployment claims filed during a pandemic

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More than 26 million Americans have applied for unemployment benefits in the past five weeks, a record number revealing the devastating economic impact of the coronavirus pandemic.

About 4.4 million people filed for unemployment benefits last week, the Labor Department announced on Thursday. Unemployment claims are the best measure of layoffs across the country.

Economists had estimated 4.5 million the number of claims, down from some 5.2 million filed the previous week and down from the historic high of 6.86 million claims filed in late March.

But while last week’s tally was lower, the number of claims was still staggering, hitting an expected unemployment rate of 16.4% in May which would be the highest since the Great Depression according to Morgan Stanley.

And more applications have been filed in five weeks than all the jobs created since the 2008 economic slowdown.

Unemployment claims are skyrocketing as the coronavirus pandemic closes. (Photo: USA Today file photo)

The national economy started to shutdown last month, as businesses closed and most residents had to stay at home to slow the spread of the coronavirus. Air travel stopped, restaurants virtually disappeared, and purchases were limited to grocery stores or online sites, as 43 states said most residents should stay indoors.

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Businesses facing declining customer base and incomes have started to lay off and lay off workers. And economists say claims will continue to rise as the economy continues to stutter, cash-strapped local governments begin to cut jobs, and concert workers are asking for help they could not have receive in the past.

“Claims have declined in the past two weeks, but remain at an extraordinarily high level,” wrote analysts at the research consultancy High Frequency Economics. “This will likely continue over the next few weeks as the closure orders remain in effect or are extended. and companies continue to fire or lay off workers. “

Morgan Stanley predicted that just under 3.8 million jobless claims had been filed last week, adding that the claims “have peaked more prominently now, but the cumulative number continues to increase by significantly ”.

He predicts that even with slightly fewer weekly requests, the unemployment rate should exceed 15% in April, and the average unemployment rate will hover at 15.7% in the second quarter.

Unemployment claims could also continue to increase as the $ 2.2 trillion federal emergency stimulus package approved in March has increased the number of people who are eligible for unemployment benefits, including those who have moved from full-time work to part-time work.

Dante DeAntonio of Moody’s Analytics wrote in a note that of workers in full-time jobs in February, 1.4%, or more than 1.6 million, switched to part-time hours in March, the largest gone in over a decade.

“Assuming that the lion’s share of this increase is the result of COVID-19, most of these workers are now eligible for (unemployment insurance) benefits,” he wrote. “This is just the tip of the iceberg since the overall job loss in the month of April could be 10 to 20 times that of March. “

With the number of workers switching to part-time hours increasing, “the inclusion of the self-employed and forced part-time workers in the (unemployment insurance) program is a positive step for those affected,” said DeAntonio . “But it will dramatically inflate the claims estimates (unemployment insurance) from past downturns.”

Oxford Economics predicts that corporate profits in the second quarter could drop 25% from the same period a year earlier, prompting companies to cut costs further.

“American businesses are in distress,” said Oxford Economics in a note to investors. “Heavily indebted companies looking to avoid defaults will undertake cost reductions by reducing their labor and capital costs, while the increase in defaults will lead to layoffs. This will worsen the current economic shock. ”

Follow Charisse Jones on Twitter @charissejones

Read or share this story: https://www.usatoday.com/story/money/2020/04/23/unemployment-benefits-millions-more-file-jobless-claims-amid-pandemic/3007667001/

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