Jobless claims jump 3.2 million in early May

By

Jeffry Bartash - Market Watch

The numbers: Almost 3.2 million people applied for unemployment benefits last week after the coronavirus cost them their jobs, but the historic wave of layoffs tied to the pandemic is receding.

The number of initial jobless claims processed in the week ended May 2 was less than half the crisis peak of 6.9 million at the end of March.

Still, some 33 million new claims have been filed in seven weeks, a record-shattering surge that has sent the economy plunging into a deep recession from which it may take years for the U.S. to recover. A separate report by large payroll processor ADP on Wednesday said more than 20 million jobs were eliminated in April, at least temporarily. The federal government’s official employment summary is expected to show a similarly large wipeout when it’s released Friday morning.

What happened: The states of California, Texas, Georgia, Florida, and New York reported the biggest increases in new claims, according to the Labor Department. California, the largest U.S. state, has received the most jobless claims overall.

The number of people collecting unemployment benefits, known as continuing claims, climbed to 22.6 million as of April 25 from 18 million in the prior week. These figures are reported one week behind initial claims

The big picture: The loss of so many jobs is bound to impair the economy for months and even years.

The federal government has sharply increased unemployment benefits, loosened eligibility standards and is effectively paying many companies to keep idled workers on payrolls until the crisis fades, but millions of jobs could be permanently lost as thousands of companies fail.

The bigger the damage to the labor market, the harder it will be for the U.S. economy to return to its pre-crisis level of growth.