On the heels of worse-than-anticipated first-quarter GDP data, investors will be bracing for additional economic data Thursday to reflect the ongoing damage being done to the U.S. economy as a result of the COVID-19 pandemic.
The U.S. Labor Department is scheduled to release weekly jobless claims figures Thursday morning, and economists predict that an additional 3.5 million Americans filed for unemployment benefits during the week ending April 25, following 4.427 million initial jobless claims in the the prior week. In just the previous five weeks, more than 26 million Americans have filed unemployment insurance claims.
Continuing claims, which lags initial jobless claims data by one week, is expected to total 19.24 million for the week ending April 18. There were a record 15.98 million continuing claims during the previous week ending April 11.
While consensus economists anticipate weekly jobless claims will be in the millions in the near term, a continued steady decline is largely expected going forward.
“We expect initial jobless claims to continue to decline on a weekly basis. Many workers affected by closures of nonessential businesses have likely already filed for benefits at this point,” Nomura economist Lewis Alexander wrote in a note April 27. “In addition, the strong demand for Paycheck Protection Program (PPP) loans, part of the CARES Act passed on 27 March, suggests some room for labor market stabilization.”
However, Barclays warns that some recent data indicated that the decline in weekly claims could actually be slower than previously estimated.
“NYC 311 calls in the week ending April 24 were running about 30% higher than a week earlier and support our change in forecast,” Barclays economist Blerina Uruci wrote in a note Wednesday. “In particular, we find it concerning that after declining steadily in recent weeks, the number of calls related to unemployment rose again during the week ending April 24.”
The firm increased its estimate for weekly jobless claims to 4 million from the previously estimated 3.25 million for the week ending April 25. Bank of America also boosted its estimate for claims to 4.1 million from the previously forecast 3.5 million claims.
“Scanning through the local news, we were able to locate information about ten states + DC. We found that claims declined only 2.5% week-to-week NSA [not seasonally adjusted],” Bank of America said in an note Wednesday.
Certain states got hit harder than others during the week ending April 18 as massive backlogs continued to pile up, and states that implemented shelter-in-place orders later than others saw an increase in claims. For the week ending April 18, California saw the highest number of initial jobless claims at an estimated 533,000 on an unadjusted basis, down considerably from 655,000 the prior week. Florida had an estimated 505,000, Texas reported 280,000 and Georgia had 244,000.
COVID-19 cases recently topped 3 million worldwide, according to Johns Hopkins University data. There were more than 1 million cases in the U.S. and 59,000 deaths, as of Wednesday afternoon.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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