With the coronavirus bearing down on the entire country, it’s likely that more people in the U.S. lost their jobs and filed for unemployment in the last week than in any week on record.
The prediction comes courtesy of analysts at Goldman Sachs, who suggest the country saw an “unprecedented surge in layoffs,” with an estimated 2.25 million people filing for employment in the last week. That would shatter the previous weekly record of 695,000 initial jobless claims (people filing for unemployment), which was set in 1982.
It would also be a nearly tenfold increase from the most recent data from the Department of Labor, which showed that for the week ending March 14, approximately 281,000 people filed for unemployment. According to the Labor Department, that was an increase of 70,000 from the previous week’s unrevised level of 211,000. It was also the highest level for initial claims since September 2, 2017, when it was 299,000.
Goldman Sachs’ analysts said that their prediction of 2.25 million unemployment claims is based on reviewing the data available from individual states and extrapolating it out for the entire country. The analysts noted that even a “conservative” estimate would peg jobless claims at more than 1 million, which would almost double the previous weekly record.
“Our estimates based on these news reports suggest that nationwide jobless claims will rise to roughly 2 ¼ million (seasonally adjusted) in the next claims report covering the week of March 15-21, a roughly nine-fold increase over the pre-virus level,” Goldman Sachs said in its report.
“While it is possible that claims were front-loaded to start off the week—implying a slower pace of claims for the week as a whole—or that our sample is biased toward states with a larger increase in claims, even the most conservative assumptions suggest that initial jobless claims are likely to total over 1 million, which would easily surpass the highest level on record of 695k in 1982,” they continued.
In a separate report, Goldman Sachs analysts claim that the widespread slowdown or shutdown of entire industries will drive unemployment from approximately 3.5% to as high as 9% later this year. “News reports point to a sudden surge in layoffs and a collapse in spending, both historic in size and speed, as well as shutdowns of many schools, stores, offices, manufacturing plants, and construction sites,” the analysts note.
It’s a far cry from what these same analysts were thinking just last month. Back in February, Goldman Sachs predicted that unemployment would fall to a 67-year low, but that was B.C. (before coronavirus).
That’s why the biggest sources of mortgage financing are already saying that they are pausing foreclosures and evictions for at least 60 days, and that certain borrowers can forgo their mortgage payments for 12 months. That’s also why states and even one of the nation’s biggest banks are saying that affected borrowers can pause their mortgage payments for the time being.
It’s likely many more announcements like this will be coming in the next few weeks. The nation is going to need it.