On Thursday, the United States Department of Labor reports, unemployment claims in the United States hit a record-breaking 3.28 million.
The previous record of weekly jobless claims took place on October 1982 with 695,000, and economists expect the unemployment numbers to increase in the next few weeks.
Early trading on Thursday, climbed 2% following the Senate passing a $2 trillion stimulus bill late Wednesday aimed at helping the U.S. economy.
The historic unemployment numbers reported on Thursday for the week ended March 21, as entire industries have shut down, were 200% higher than what analysts predicted, according to CNBC. A Goldman Sachs report predicted 2.25 million unemployment claims.
One of the hardest-hit sectors hit by the unemployment industry is the Entertainment industry, according to the Labor Department. Nearly every Hollywood production shut down, theme parks, concerts, and movie theaters have shut down across America, leaving hundreds of thousands of people out of work.
“Investors’ nightmares have unfortunately become a reality in the U.S. with the latest unemployment claims,” said John Westwood, group managing director at Blacktower Financial Management Group, The Guardian reports. “The challenge for the markets now is that there is still no end in sight, as the U.S. is still new into its COVID-19 problem.” Donald Trump said Tuesday he wanted “the country opened up” by Easter (April 12) to stave off further economic damage. Still, experts said that is unlikely to happen and warned that it would have catastrophic effects on the spread of the virus. “The lack of trust in the president’s comments and the latest data means that the markets are now more uncertain than ever before,” Westwood said.
The Labor Department initially reported jobless claims from two weeks ago increased 30% to 281,000 for the week of March 14th. Fortune reports, 6 million people will lose their jobs by the end of March 2020, but that number could rise even higher.
Ambrose Crofton, a market analyst at J.P. Morgan Asset Management, says the U.S. economy has hit a recession. “The US economy has entered a recession. Initial claims – a measure of the number of new filings to receive unemployment benefits– rose to 3.283 million for the week ending 21 March. The speed and magnitude of the move higher highlight how US businesses have had to let staff go in the face of the sudden coronavirus shutdown.
Policymakers have moved to try to limit the extent of this recession: the US Federal Reserve has cut its key interest rate to zero and restarted quantitative easing at an aggressive pace, and Congress agreed a $2.2 trillion bill to support businesses and consumers. Despite this support, a neutral allocation to risk may make sense, at least until jobless claims and the infection rate have peaked.”
Analysts have not understood the consequences of the Coronavirus outbreak, but based on the numbers so far, things are a lot worse than many predicted.