Today's initial claims figure was at the upper end of the wide range of market expectations.
- US jobless claims were off the charts at 3.28 million last week
- Increase of 3 million from the previous week (nearly 2% of labour force)
- $2 trillion stimulus package includes badly-needed enhancements to unemployment benefits
In any case, it’s absolutely shocking to see 2% of the US labour force making jobless claims in a single week. The number highlights just how quickly some sectors of the economy have essentially ground to a halt. The Department of Labor noted that nearly every state cited coronavirus impacts—in service industries broadly and most significantly accommodation and food services. Health and social, arts and entertainment, transportation and warehousing, and manufacturing were also hit hard.
The scale of layoffs underscores the need for more generous unemployment insurance to help people through this unprecedented period of economic disruption. The $2 trillion stimulus package passed by the Senate last night (the House will vote on Friday) eases eligibility requirements, removes a one-week waiting period, and includes a federal top-up to state benefits. It also provides funding for administrative costs to help state offices that are clearly being inundated with new claims.
Josh Nye is a senior economist at RBC. His focus is on macroeconomic outlook and monetary policy in Canada and the United States. His comments on economic data and policy developments provide valuable insights to clients and colleagues, and are often featured in the media.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.