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Here's why the jobless claims report is worse than it seems

Yahoo Finance’s Emily McCormick joins Seana Smith to discuss why the U.S. jobless claims report may actually be worse than it appears.

Video Transcript

- Welcome back to Yahoo Finance live. We've been talking about that huge headline number that we got out this morning before the opening bell. That was the jobless claims. 3.3 million Americans filing for jobless claims last week. The number shattering the previous record of 695,000 back in 1982-- more than four times that number.

Well, for more on this, let's bring in Emily McCormick. And Emily, I know you were digging into this pretty large number that we got this morning. But you're saying it could even be worse than what this headline number suggests. Walk us through that. Does have to do with the fact that all these job losses due to the coronavirus might not be accounted for yet?

EMILY MCCORMICK: That is what some economists are saying. And really, the key issue here is the coronavirus outbreak isn't just weighing on the Labor Department-- or, excuse me-- the labor force overall, but it's also weighing on the government's ability to actually accurately tally these numbers.

So really, what economists are saying is that this report, even though it was a record, it did top 3 million new unemployment claims, this could actually be an understatement. And we could see even larger rises in the weeks to come and an even larger spike in the unemployment rate.

So just to quantify that a little bit more, one of the points that economists really homed in on is the fact that Pennsylvania was actually the state in this report that had the most claims at 379,000. And yes, Pennsylvania has been hit by the COVID-19 outbreak, but not necessarily as hard and yet as we've seen in areas like New York or California. And in those states, the number of jobless claims for the most recently-reported week did trail that.

So for California, that was 186,000 claims. And New York had about 80,000. So those could potentially be under-reported. Of course, yesterday, we just had California Governor Gavin Newsom saying that 1 million Californians had filed for unemployment benefits since March 13.

So it seems like the numbers that we're getting here aren't quite lining up with the individual state data and the anecdotal data that we've been getting from states saying that their individual states' departments of labor haven't been able to handle the traffic that they've received to get unemployment claims overall.

- Yeah. Emily, it's interesting, because going through some of the expectations for next week, there's already been some estimates that have been put out there. And Goldman was saying that they expect a similar or even larger pace of filings in next week's release.

EMILY MCCORMICK: Absolutely. And just seeing the numbers that we're getting now and how that translates into the March jobs report, one of the things Capital Economics economist Paul Ashworth said is that, at 3.3 million unemployment claims for the most recent week, that equates to an unemployment rate of somewhere between 30% and 40%.

They're not saying that that will necessarily rise to those levels. But they did say that they would be amazed if we don't get an unemployment rate of more than 10%. So we could be seeing a huge surge here in the unemployment rate coming up.

- All right, Emily. Thanks so much.

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