Goldman Sachs predicts a record 2.25 million Americans could enter claims for unemployment benefits this week as coronavirus-driven layoffs hit the labor market. The novel virus has forced cities to shut down and prompted people to stay at home to combat its relentless spread.
“Many US states have reported unprecedented surges in jobless claims this week,” David Choi, one of the bank’s economists, said in a research note.
Unemployment filings already jumped by 70,000 to 281,000 last week, according to Labor Department data published on Thursday. Goldman’s forecast of 2.25 million suggests they will balloon another eight-fold this week, blowing past the previous record of nearly 700,000 set in 1982.
The spike comes as coronavirus fears continue to decimate demand across industries such as airlines and hotels, and governments scramble to slow the outbreak by shutting down bars and restaurants and canceling events, leading to mass layoffs.
Choi and his team based their prediction on a surge in unemployment claims across 30 states this week. New York State’s Department of Labor fielded 159,000 calls before noon on Thursday – nearly 16 times its typical daily volume. California – which typically receives 2,000 applications a day – was inundated by 80,000 on Tuesday, Governor Gavin Newsom told the Sacramento Bee.
The Goldman economists cautioned that claims might tail off in the second half of this week, or they may have sampled states experiencing a sharper increase in claims. However, they added that “even the most conservative assumptions suggest that initial jobless claims are likely to total over 1 million.”