The number of Americans filing for unemployment benefits is set to climb to historic highs after claims in Canada crushed the previous weekly record as Covid-19 brings businesses to a standstill.
New unemployment data is expected to reflect how hard the US economy has been hit by the Covid-19 outbreak. The minimum number of initial claims amounts to 250,000, according to a Reuters poll, while economists predict that the number of filings for last week could range from one to four million.
That would make the number of jobless claims higher than during the 2009 financial crisis or the 1982 recession.
The shocking data could further disappoint investors and trigger another bloodbath on Wall Street as it is set to be released later on Thursday right before the opening bell.
Some say that the worst is yet to come, as last week’s figures may fail to show an accurate picture.
“It’s the tip of the iceberg, and they’re going to be ugly. It depends on the speed at which the claims were filed, and the next week will probably be worse,” chief economist at Grant Thornton, Diane Swonk, said as cited by CNBC.
Last week, new jobless claims in the US saw the biggest weekly surge in nearly eight years as they hit a two-and-a-half year high of 281,000.
As Covid-19 has been wreaking havoc across the globe, Canada also saw an unprecedented jump in jobless claims. According to government sources cited by various media, 929,000 people (or around five percent of the labor force), applied for unemployment insurance last week.
As of Thursday morning, the virus has already killed more than 21,000 people and the number of infections worldwide has reached half a million. Out of the more than 69,000 infections registered in the US, over 1,000 people have died. Nearly 3,400 cases were reported in Canada, 35 of them lethal.
The US government has approved a $2 trillion rescue package to mitigate the economic impact of the epidemic, including cash transfers to workers and additional checks on top of what unemployment beneficiaries normally receive from states. However, the nationwide lockdown is a threat to the economy due to prolonged business shutdowns and job losses.
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