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Economists forecast an additional 2.4 million Americans filed for unemployment insurance last week

FILE PHOTO: People who lost their jobs wait in line to file for unemployment following an outbreak of the coronavirus disease (COVID-19), at an Arkansas Workforce Center in Fayetteville, Arkansas, U.S. April 6, 2020. REUTERS/Nick Oxford

  • The median economist estimate for jobless claims in the week ending May 16 is 2.4 million, according to Bloomberg data. The Labor Department will release the official report Thursday. 
  • While it would be another week of declining claims, the number of Americans filing for unemployment is still highly elevated. 
  • "We are becoming less hopeful of a quick drop in jobless claims below the one million mark, which had seemed likely to come as soon as early June," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Wednesday note. 
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Economists expect that Thursday's weekly initial jobless claims report from the Labor Department will show that 2.4 million Americans filed for unemployment insurance in the week ending May 16, according to Bloomberg data. 

While it would be another week of declining claims, it's still an elevated number that shows the continued devastation of the coronavirus pandemic on the US labor market. In the previous week ending May 9, claims were nearly 3 million.

Claims have gradually declined each week since they peaked at the end of March. Economists have been closely watching the rate of falling claims to gauge when they might return to some semblance of normalcy, or at least fall below the 1 million level. 

"The immediate outlook is grim," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Wednesday note. "We are becoming less hopeful of a quick drop in jobless claims below the one million mark, which had seemed likely to come as soon as early June."

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The continued high level of claims may indicate that some businesses that initially kept staff on — potentially using the Payroll Protection Program — have now thrown in the towel, said Shepherdson. They may be "concluding that they won't be able to operate profitably under the inevitable restrictions on customer numbers as the economy reopens," he said. 

Economists are also looking at initial claims to forecast the May jobs report, due to be released Friday, June 5. In April, the US economy lost a record 20.5 million jobs and saw the unemployment rate spike to 14.7%, the highest since the Great Depression. 

It's likely to get worse. "We would still expect net job losses in the millions in May," Bank of America economists led by Michelle Meyer wrote in a Wednesday note. "This will likely be followed by further, albeit more moderate, cuts in June."

Bank of America expects the unemployment rate to peak "close to 19%" by the end of the second quarter, according to the note.

"It is quite possible that the unemployment rate ends up even higher, in excess of 20%," Meyer wrote.

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