Nearly 3.3 million Americans applied for unemployment benefits last week—more than quadruple the previous record set in 1982—amid a widespread economic shutdown caused by the coronavirus. The surge in weekly applications was a stunning reflection of the damage the viral outbreak is doing to the economy. Filings for unemployment aid generally reflect the pace of layoffs. As job losses mount, some economists say the nation's unemployment rate could approach 13% by May; it was at a 50-year low of 3.5% in February. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10%. More from the AP:
- Many people who have lost jobs in recent days have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up. That logjam suggests that Thursday's report on filings for unemployment benefits actually understates the magnitude of job cuts last week.
- Even for those able to file a claim, the benefits will take time to kick in. It typically takes two to three weeks before applicants receive any money. State agencies must first contact their former employers to verify their work and earnings history. Only then can the employee’s weekly unemployment benefits be calculated.
- Worsening the problem, most state agencies that handle unemployment claims are operating at historically low funding levels and staffing that are intended to handle a trickle of claims. Just weeks ago, the job market was in the strongest shape it had been in decades.
- Ellen Zentner, an economist at Morgan Stanley, said in a note to clients that 17 million jobs could be lost through May—twice the entire 8.7 million jobs that were lost in the Great Recession. She expects the unemployment rate to average 12.8% in the April-June quarter, which would be the highest level since the 1930s.
- Still, Zentner also expects the economy to start recovering by the second half of the year. It will take time for things to return to something close to normal, she projects: The unemployment rate could still top 5% at the end of next year.
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