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By Lucia Mutikani
WASHINGTON (Reuters) – A record 26 million Americans have likely claimed unemployment benefits in the past five weeks, confirming that all of the jobs created during the longest job boom in state history -United States were wiped out in about a month as the new coronavirus ravaged the economy.
The weekly report on jobless job demands released Thursday by the Labor Department will add to a growing pile of increasingly bleak economic data. He will intervene amid growing protests against blockages nationwide to control the spread of COVID-19, the life-threatening respiratory disease caused by the virus.
President Donald Trump, who is seeking a second term in the White House in the November general election, is eager to revive the crippled economy. Trump applauded steps taken by a handful of Republican-led states on Wednesday to begin reopening their economies, despite warnings from health experts of a potential new outbreak of infections.
“The US economy is hemorrhaging jobs at a pace and scale never seen before,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “This compares to a natural disaster on a national scale. “
Initial claims for state unemployment benefits likely totaled $ 4.2 million during the week ended April 18, according to a Reuters survey of economists. Still a figure that would have been considered incredibly high less than two months ago, it would be lower than 5.245 million the previous week. Survey estimates for Thursday’s data were as high as 5.50 million.
According to the median forecast, last week’s claims data would bring cumulative unemployment benefit claims to about 26.2 million since the week ending March 21, which represents about 16% of the workforce . The economy created 22 million jobs during the job boom that started in September 2010 and abruptly ended in February this year.
Last week’s claims report covered the period during which the government investigated commercial establishments for the non-farm wages component of the April employment report. Economists predict as many as 25 million jobs lost in April after the economy cut 701,000 jobs in March, the largest decline in 11 years.
“This negates all of the job gains over the long expansion,” said Joseph Brusuelas, chief economist at RSM in New York. “Once the economy starts to reopen, initial demands will slow down, but we have to be honest, not everyone will find their job. “
Slaughter in the labor market adds to the collapse in oil prices, retail sales, manufacturing production, residential construction and home sales, reinforcing economists’ claim that the economy is went into recession in March.
The National Bureau of Economic Research, the private research institute considered to be the arbiter of American recessions, does not define a recession as two consecutive quarters of decline in real GDP, as is the rule of thumb in many countries. Instead, it is looking for a drop in activity, spread across the economy and spanning more than a few months.
Although jobless weekly deposits remain very high, last week’s data would mark the third consecutive weekly decline, hoping that the worst could be over. Weekly claims appear to have peaked at 6.867 million in the week ended March 28.
“Claims that have been overdue due to capacity concerns should continue to be processed, with initial claims falling to more normal levels but still high,” said Andrew Hollenhorst, economist at Citigroup (NYSE ? in New York. “Although layoffs and leaves are likely to continue in a number of industries in the coming weeks, we are cautiously optimistic that the peak in layoffs after the initial widespread closings has occurred. “
Part of the drop in claims was attributed to a historic budget package of $ 2.3 trillion, which provided that small businesses would have access to loans that could be partially canceled if used for employee wages. The US Senate on Tuesday approved $ 484 billion in a new relief package, which mainly expands the financing of small business loans.
With demand set to decline gradually over the next few weeks, as more small businesses access funding, attention will focus on the number of unemployment benefit recipients.
The so-called continuous claims data is presented with a lag of one week and is considered a better measure of unemployment. Outstanding claims are expected to have reached a record high of 16.476 million in the week ending April 11, up from 11.976 million in the week ending April 4.
Next week’s claims data will provide some clues to the magnitude of the projected jump in the unemployment rate in April. Continuing claims have not kept pace with the first jobless claims.
Economists estimate that some people fired from work because of government-mandated “home” orders have found jobs in supermarkets, warehouses, and delivery companies. Unemployment is expected to break the 10.8% record it reached after the Second World War in November 1982. The unemployment rate rose 0.9 percentage points, the largest change in a months since January 1975, at 4.4% in March.