A record 22 million Americans have filed for unemployment benefits over the past month, erasing a decade of job gains as the nation grapples with the unprecedented shutdown of the U.S. economy to contain the coronavirus.
About 5.2 million people filed for unemployment benefits last week, the Labor Department said Thursday. Jobless claims provide the best measure of layoffs across the country. Economists surveyed by Bloomberg had estimated that 5.5 million Americans would file initial applications for unemployment insurance last week.
That brings the total claims over the past four weeks to a staggering 22 million. By comparison, the labor market added 21.5 million jobs since the Great Recession.
“After an unprecedented climb, initial unemployment claims appear to have reached a vertiginous plateau,” Gregory Daco, chief U.S. economist of Oxford Economics, said in a note. “While it now appears that we have passed the peak in layoffs, jobless claims are poised to remain extraordinarily high in coming weeks as the economy plunges deeper into a recession.”
Oxford Economics projects job losses of 24 million in April, and the unemployment rate is forecast to spike to 14%. The firm anticipates that some jobs will be recouped once the virus is contained and economic activity recovers, but it doesn’t expect the U.S. economy to reach pre-coronavirus levels of employment until early 2022.
“The trajectory of the virus itself will ultimately determine how long the economy will remain shuttered,” analysts at Deutsche Bank Research said in a note.
Some economists predict gross domestic product could fall more than 30% on an annualized basis in the second quarter, leading investors to question whether the economy could slump into a depression.
The economy’s downturn ends a nearly 11-year economic expansion that lasted a record 128 months, more than double the average, and topped the previous record from the 1990s, according to LPL Financial.
Goldman Sachs projects second-quarter gross domestic product to decline 11% from a year ago on an annualized basis and 35% from the prior quarter.
Historically, the U.S. economy has taken an average of about 30 months to surpass its previous peak in employment after a recession, according to Ben Ayers, senior economist at Nationwide. That suggests long-term economic impacts for many of the people and households who have lost their jobs in recent weeks, he said.
“The unprecedented amount of layoffs hitting the workforce underscores the dramatic and immediate effect of the government-mandated shutdowns across the country,” Ayers said in a note. “While some of these workers should regain their jobs once the economy restarts, many will not for some time.”
Some analysts say there are still reasons to believe economic growth may recover at the tail end of the year through fiscal policy from the Federal Reserve and Washington.
“One thing that makes this recession so unique is it was intentionally brought on by the government by closing non-essential businesses and issuing stay-at-home policies,” Ryan Detrick, senior market strategist at LPL Financial, said in a note. “Depending on how long it takes to contain the virus, we wouldn’t be surprised if this becomes one of the quickest recessions ever.”