The most hotly-anticipated jobless claims number in history is in the books.
The official number is 3.283 million.
That is, in a word, enormous. In another word, it’s unprecedented. In three words, it’s off the charts – literally.
Of course, it’s hardly unexpected.
Over the past week, economists have spilled gallons upon gallons of digital ink opining on the coming US unemployment crisis associated with the various lockdown measures implemented across the country to contain the coronavirus.
Economists’ efforts centered first and foremost around estimating near-term unemployment claims, using both state reporting and anecdotal evidence. The range of estimates varied from 1 million to 4 million, with the overarching point being that irrespective of where, in that range, the actual number fell, Thursday would be a historic day for claims.
Officially, consensus was 1.7 million. The range from 47 economists polled by Bloomberg was from 360k to 4.4 million. Not to put too fine a point on it, but whoever is responsible for that 360k prediction probably needs to look for another line of work.
The Labor Department last week ordered state officials “to do nothing more than ‘provide information using generalities to describe claims levels until the department releases the total number of national claims next Thursday”, according to a letter leaked to The New York Times a few days ago. That betrayed the extent to which the administration was concerned about the severity of these figures.
The irony is, the market was expecting this thanks in no small part to state-level reporting (in apparent defiance of the Labor Department’s “guidance” to keep quiet), which may mean the impact of the figure is muted.
Or not. Who knows. It’s certainly possible that market participants view this for what it most assuredly is: Evidence of the largest economy in the world coming to a screeching halt.
As part of their efforts to estimate the figures ahead of time earlier this week, Aaron Sojourner (a research associate at The Economic Policy Institute, a labor economist and an associate professor at the Carlson School of Management at the University of Minnesota) and Paul Goldsmith-Pinkham (an assistant professor of finance at the Yale School of Management), noted that “3.4 million Americans moving from employment to unemployment would raise the number of the unemployed from 5.7 million to 9.1 million”. That, in turn, “would raise the unemployment rate by more than half, by 2 percentage points from 3.5% to 5.5%, moving back to 2015 levels in just one week”, Sojourner and Goldsmith-Pinkham went on to say.
For context, the biggest monthly jump in the unemployment rate in American history was 1.3 percentage points in October 1949.