“Oftentimes people didn’t take the unemployment insurance because there was an opportunity to find another job. That is not the case right now,” said Diane Swonk, chief economist at Grant Thornton LLP. “People who never took unemployment before would take it in this environment because they have no choice.”
Pennsylvania Figures
One possible bright spot in the data: Pennsylvania, which initially saw outsize weekly figures compared with other states, has begun to show a slower pace of claims, offering hope that other states may follow.
Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., said most of the layoffs in the U.S. have likely already occurred, noting how most of the stay-at-home orders went into place more than a week ago.
Initial jobless claims may stay elevated given the backlog, Feroli said. He forecasts an unemployment rate of 20% in April and holding around there in May, before sliding back down when people head back to work.
The figures may fluctuate, though. Swonk said government stimulus could pull workers back onto payrolls in May or June, but if financing from the program runs out, unemployment may jump again later in the year.
Also, the claims figures so far also likely don’t account for all of the gig workers and self-employed Americans who have suddenly lost their main source of income. While those workers aren’t reflected in the Labor Department’s payrolls figure -- which is derived from a survey of employers -- they play a role in the calculation of the unemployment rate, which comes from a separate survey of households.
Some states are just beginning to open applications for pandemic unemployment assistance, or the aid made available to the self-employed and those not typically eligible for unemployment benefits by the stimulus bill passed last month. Others may take weeks.
And it’s possible millions more job losses are in the pipeline for the coming months.
“There are people, there are businesses who are still hanging on that are going to lose their grip,” Sahm said.
--With assistance from Michael Sasso and Chris Middleton.
This article was provided by Bloomberg News.