A Record 3.28 Million Workers Applied for Unemployment Benefits Last Week
The number of unemployment claims was nearly five times the previous record high increasing the number from the previous report by 3 million for the week ending March 21. The worst hit states were Pennsylvania, California, Massachusetts, New Jersey and Ohio. Until March, U.S. employers added jobs for a record 113 straight months, causing payrolls to grow by 22 million. The unemployment rate had reached lows not seen in almost 60 years (3.5% in February). Wages sbegan to increase steadily over the last two years after lagging during the early stages of the expansion that followed the 2007-09 recession.
The elements that kept the U.S. economy humming for a decade, withstanding a European debt crisis, Japan’s tsunami, a Chinese economic slowdown, a domestic manufacturing slump, volatile energy prices and a global trade war, could not withstand the Covid-19 outbreak.
“We haven’t seen this big of a free fall before,” said Keith Hall, former director of the Congressional Budget Office and adviser to President George W. Bush. “Not even during the Depression…It’s really like an instant Great Recession.”
Mr. Hall said the jobless rate in the coming months could approach the 20%. Northern Trust Chief Economist Carl Tannenbaum said if half the workers in hard-hit industries, such as restaurants, retail and personal services, are laid off the unemployment rate could rise to more than 13%. (record high of 10.8% in 1981-82 recession).
“This is happening with dizzying speed, and therein lies my concern,” said Mr. Tannenbaum. “The shock and awe from the forthcoming employment numbers could be damaging to the nation’s psyche.”
Denzel Buie, 25 years old, was laid off from his union construction job Friday when local authorities shut down projects. His wife, a secretary, was laid off a week earlier when the allergist’s office where she worked suspended operations.
“It’s not like I can go get another job,” Mr. Buie said. “It was a massive layoff—the entire construction industry in Philadelphia shut down. All I can do is stay home and pray I don’t get sick, because if I go to the hospital, that’s another bill.”
General Electric Co. ’s jet-engine business said it would lay off about 2,500 employees. Medical offices not tied to treating the virus, including dentists and physical therapists, are shutting and letting workers go. Those providing in-person services, such as barbers, massage therapists and housecleaners, are seeing business evaporate.
Walmart Inc., Amazon.com Inc., and CVS Health Corp. are among about 12 large companies that have said they are seeking to hire nearly 500,000 workers in coming weeks.
“We are hiring,” says Jeff Stevenson, who runs a wine marketing business that focuses on remote sales called VinoPRO Inc. “We literally had our single largest sales day of the year last Wednesday.”
Mr. Hall, the former CBO director, is among the economists who expect the economy to recover at a slower pace than it contracts.
“We kept getting fooled,” he said. “We kept thinking the labor market couldn’t keep improving, but it did. Let’s hope that the surge in labor-force participation is a permanent one and once we get through this those people will be back to work.”