Another 6.6 million Americans filed for unemployment benefits last week, bringing the four-week total for initial jobless claims to more than 17 million.
The latest numbers from the Labor Department mean that at least 10% of the U.S. labor force is now out of work, and some experts think the unemployment rate could be several points higher than that, once all of the people who have been unable to file for benefits at the state level due to overwhelmed reporting systems are taken into account.
“So far, jobless claims look to me like the only limitation on the number of applications has been the states’ ability to process those claims,” said Darrell Cronk, chief investment officer of Wells Fargo Wealth and Investment Management.
In a note to clients, economist Chris Rupkey of MUFG Bank said he sees the unemployment rate rapidly heading toward 15%. “This isn’t a recession, it’s the Great Depression II,” Rupkey wrote.
A ‘purposeful sacrifice’: Labor Secretary Eugene Scalia emphasized that the eye-popping unemployment numbers are the product of an intentional effort to slow the pace of a global pandemic, with about 95% of the U.S. population currently under stay-at-home orders. “Today’s report continues to reflect the purposeful sacrifice being made by America’s workers and their families to slow the spread of the coronavirus,” Scalia said in a statement.
Unemployment benefits slow to arrive: The roughly $2 trillion relief package signed into law two weeks ago provides an extra $600 per week for unemployed workers, but state offices have been overwhelmed with applications, making it difficult for millions of workers to file their claims.
Lawmakers are pushing the Labor Department to move faster. “The Department and state workforce agencies have a monumental task ahead in processing these claims,” a group of Senate Democrats said this week in a letter. “But Americans who have lost their jobs don’t have time to wait for a check. People need unemployment compensation now so they can buy groceries, pay rent, and keep up their bills. Without it, many Americans won’t be able to make ends meet.”
More layoffs ahead: As shocking as the unemployment numbers have been so far, economists expect them to move higher in the coming weeks. Michelle Meyer of Bank of America Merrill Lynch expects to see as many as 20 million job losses by May, pushing the unemployment rate to 15%. Oxford Economics has an even grimmer outlook, with 26 million layoffs and a 16% jobless rate by the end of next month.