Record 6.6M Americans filed for jobless benefits last week

More than 6.6 million Americans filed for new jobless claims in the week that ended March 28, doubling the record amount seen the previous week, when the COVID-19 crisis was beginning to wallop the U.S. economy.

The 3.3 million Americans who had filed for jobless benefits the previous week was already a record, shattering the 692,000 who did so during one week in 1982.

Official job numbers for Canada will come out April 9, and are likely to be similarly dour, since we already know that almost one million Canadians filed for unemployment insurance claims in a single week in March.

The U.S. figure more than doubled what economists had been expecting, and means that almost 10 million Americans have filed for jobless benefits in the two weeks since quarantines and lockdownsof roughly 80 per cent of the U.S. population began.

For comparison purposes, the worst single week for jobless claims during the financial crisis of 2008 and 2009 came in March 2009, when 665,000 Americans did so. For the entire duration of the financial crisis, the U.S. economy lost about 8.7 million jobs.

'There is a backlog'

As bleak as the number is, Bank of Montreal economist Jennifer Lee notes that it could in fact be masking an even worse reality.

"The disturbing fact is ... this may be underestimating the real figures, given reports of how completely overwhelmed the unemployment offices are in processing the requests for [unemployment benefits], so there is a backlog," she said.

If there is a bright spot in the numbers, it is likely that the continuing claims number went down. Initial claims are filed by people who are seeking jobless benefits for the first time. Continuing claims tracks the number of people who were already getting benefits who still qualify for it.

Economists had been expecting the continuing claims number to come in at 4.8 million for the week. In fact, the number fell to threemillion.

That implies some people have already found work after losing their job the first time, but even that bright spot could be misleading, because the government offices that process jobless benefits "are likely to be overwhelmed by the number of claims," said economist James Knightley, withDutch bank ING.

"Coupled with having to work from home ...this may also explain why continuing claims significantly undershot expectations."

Layoffs coming 'at extraordinary pace'

The jobless claims number is a stark warning of what may come Friday, when official numbers for jobs for the month of March are due.

Those numbers are based on a survey the U.S. government did of businesses and households in the middle of the month, before widespread lockdowns were in place.

David Kelly, chief global strategist at JPMorgan Funds in New York, saidhe's expecting those numbers to show the U.S. economy could lose 16 million jobs when all is said and done.

"The loss would be enough to boost the unemployment rate from roughly 3.5 per centto 12.5 per cent, which would be its highest rate since the Great Depression."

If the jobless claims number stays this high through April, the U.S. jobless rate is likely to jump to something around 20 per cent, TD Bank economistSri Thanabalasingamsaid.

"Regrettably, with layoffs coming in at an extraordinary pace, this outcome appears increasingly likely," he said.