Weekly unemployment claims start to give a snapshot of COVID-19 layoffs
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We got an important economic report from the Labor Department Thursday morning — first-time claims for state unemployment benefits. When the number starts going up sharply, it’s often a warning sign that the economy’s in trouble.
For the week of March 14, there were 281,000 new claims, the highest level for initial claims since Sept. 2, 2017, when it was 299,000. This is up 70,000 from the first week of March, when there were 211,000 — near a historic low.
So, the layoff spike has started. But things will only get worse: Thursday’s data doesn’t even account for this week, when layoffs related to COVID-19 really started to ramp up.
We’ve seen multiple signs in recent days that layoffs are on the rise. Marriott is furloughing tens of thousands of hotel workers. Nevada is shuttering its casinos. Empty ports are laying off truck drivers. Canceled festivals are laying off staff.
Joseph Brusuelas at RSM Consulting said states are now being flooded with requests for unemployment benefits, and we should expect more.
“Over the next two to four weeks, a massive increase in first-time initial jobless claims,” Brusuelas said.
Over the last five years, claims have averaged around 250,000 a week. Brusuelas said once we go over that number, it tells us “the business cycle is over and the onset of a recession has begun.”
Unemployment was 3.5% in February, and Ryan Nunn at the Brookings Institution said it’s likely to start rising sharply.
“If we do get to rates of unemployment like those we saw in the Great Recession, the consequences will be quite, quite bad,” Nunn said.
Then, unemployment peaked at 10%. Treasury Secretary Steven Mnuchin has reportedly warned lawmakers that without robust economic stimulus measures, unemployment could hit 20%.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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