With the coronavirus pandemic forcing people out of work in every sector of the economy, unemployment claims are likely to rise by another 5.25 million since last week, according to reports Wednesday (April 8).
That’s in addition to the almost 10 million that have filed since government efforts to thwart the virus started forcing businesses to close their doors in March.
However, the claims are probably only a fraction of the actual number of people who have lost their jobs since the companies and economy abruptly shut down.
Experts expect the overall unemployment rate, currently at 4.4 percent, to jump into the teens this month, according to published reports. In February, the rate was 3.5 percent. There are around 10 million to 20 million people estimated to show up in economists’ reports as lost jobs.
Diane Swonk, chief economist at Grant Thornton, told CNBC the first wave of unemployment claims focused on leisure fields, with those workers who had been deemed non-essential. But the oncoming second wave will focus more on retail, manufacturing and auto industries, along with others, with workers who have been furloughed and auto plants shut down or slowed down activity.
Macy’s has said it would scale down its 130,000 workers to an absolute minimum to keep going, and Gap said it would furlough most of its workers. Employers, as states continue with tight restrictions on Americans’ movements to try and contain the virus, will continue to make tough choices to keep costs low, which means more layoffs are likely to come.
In almost every category, the current waves of layoffs and job losses dwarf anything in recent memory. Economists noted that the weekly claims data for unemployment being in the millions were far higher than the last high number of 700,000 during the previous 2008 financial crisis.
However, Mark Cabana, head of U.S. short-rate strategy at Bank of America, told CNBC the markets had not budged much even with the skyrocketing numbers. Strategists theorize that the markets remain optimistic about the notion that the virus will reach its peak soon and things can recover.