Unemployment claims jump to new heights in both US and Wisconsin

Remember when I was making jokes last week after a record 3.3 million Americans filed new claims for unemployment? I said that the stock market went up because investors channeled Howard Jones and figured “Things can only get better!”

Well, we found out today that it didn’t get better last week.

More than 6.6 million Americans applied for unemployment benefits last week — doubling a record high set just one week earlier — a sign that layoffs are accelerating in the midst of the coronavirus outbreak.

Combined with last week’s report that 3.3 million people sought unemployment aid two weeks ago, the U.S. economy has now suffered nearly 10 million layoffs in just the past few weeks — far exceeding the figure for any corresponding period on record.

The stunning report Thursday from the Labor Department showed that job cuts are mounting against the backdrop of economies in the United States and abroad that have almost certainly sunk into a severe recession as businesses have shut down across the world.

Wisconsin joined the rest of the country in seeing a large increase in claims, going from just over 5,100 in the second week of March, to more than 51,000 2 weeks ago, to 110,721 in the last week of March. You can see in this chart that this is way above anything that has happened for new filings for this time of the year, and it broke an 11-year trend of declining claims.

And what may be even more freaky is that there likely are layoffs more to come, at least in the near future.

Further signs of a surging wave of layoffs are likely in the coming weeks. Seth Carpenter, an economist at Swiss bank UBS, estimates that about one-third of last week’s claims had been delayed from the previous week, when state offices that handle unemployment benefits were overwhelmed by a surge of online and telephone claims. Yet many of those offices are still struggling to process all the claims they have received, suggesting more claims will be pushed into the following week.

Wisconsin is also an example of this situation, with an overloaded Department of Workforce Development that cannot answer all phone calls, and new claims for this week exceeded 70,000 through Wednesday.

The suddeness of the change and the huge numbers are hard for me to get my head around, especially given where we were a month ago. In the last US jobs report for February, the US had a seasonally-adjusted total of less than 5.8 million people listed as “unemployed”, meaning they had not worked an hour in the past week but were looking for work.

Now add the 9.9 million new claims to that number, and that would increase the unemployment rate from 3.5% to 9.5% on its own. Then add in what we'll see in the next 2 weeks, and it is very possible that we will have a double-digit unemployment rate in April's US jobs report. Ironically, I'm not expecting tomorrow's March jobs report to be too awful. Why? Because the monthly survey was taken during the week before the spike in unemployment claims, in a week were there were only 280,000 claims in the country.

Keep that timing in mind around 7:30am on Friday, and if you see someone trying to use the small numbers to claim "coronavirus isn't hurting us that bad," just laugh and wait till the bloodbath that we already know will be in April's report. That'll be true for both the country at large, and in Wisconsin.