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A view of New York state department of labor office in Brooklyn New York USA during coronavirus pandemic on April 14, 2020.
John Nacion | NurPhoto | Getty Images
Some economists expect there were at least 4 million workers who filed for state unemployment benefits last week, signaling the job losses could be greater than expected, as states catch up on claims applications.
The sudden shutdown of the economy, starting in the second half of March, has resulted in an unprecedented number of layoffs and furloughs, and is expected to send claims for benefits to above 30 million in six weeks. Claims already had reached 26.4 million in the prior five weeks.
Total claims filed with states for the week ended April 25 will be reported Thursday at 8:30 a.m. The consensus forecast of economists was at 3.5 million, according to Dow Jones. There were 4.4 million claims filed in the prior week of April 18.
But economists at both Barclays and Bank of America upped their forecasts for Thursday’s jobless claims. Bank of America said the claims now look come in between 4.0 million to 4.2 million. Barclays economists raised their forecast, to 4 million from 3.25 million.
Barclays chief U.S. economist Michael Gapen said there are signs at the state level of more filings than previously expected. He also said the government programs, such as the Paycheck Protection Program, which were intended to help companies retain employees during the shutdowns and keep the economy in a “suspended animation” may not be as effective as expected.
“The unemployment rate is telling you it’s not as successful as we had hoped it would be. Programs like the PPP were expected to keep workers on payrolls. So far, that wasn’t the case,” he said.
Economists have said there could be some signs the PPP was helping return workers to payrolls, but it may not show up for another couple of weeks.
“It’s accurate to say the unemployment rate moved higher than many had expected. We think it will be 19% in April,” Gapen said. “The six week cumulative in jobless claims will be about 30 million.”
Claims for the prior week, ending April 18, rose by 4.4 million, well below the peak of 6.6 million two weeks prior
Bank of America economists said they find claims have only declined 2.5% from last week, after scanning local news on state level data. They found claims in 10 states and the District of Columbia show the total could be modestly higher than expected.
For instance, they found reports of claims rising to 437,000 in Texas from 280,000 the week earlier. Claims in New Jersey reportedly rose to 200,000 for the week ended April 25, from 139,000 the week before.
Barclays economists said they also changed their forecast based on state data, including a jump in unemployment related phone calls to New York state.
