NEW YORK (Reuters) – The number of Americans filing claims for unemployment benefits shot to record of more than 3 million last week as strict measures to contain the coronavirus pandemic ground the country to a sudden halt, unleashing a wave of layoffs that likely brought an end to the longest employment boom in U.S. history.
A man crosses a nearly empty 5th Avenue in midtown Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., March 25, 2020. REUTERS/Mike Segar
Initial claims for unemployment benefits rose to 3.28 million in the latest week from a revised 282,000 the previous week, eclipsing the previous record of 695,000 set in 1982, the U.S. Labor Department said on Thursday. Economists polled by Reuters had forecast claims would rise to 1 million, but estimates had ranged to as high as 4 million.
The jobless blowout was announced shortly after Federal Reserve Chairman said on NBC’s Today Show that the U.S. “may well be in recession” but progress in controlling the spread of the coronavirus will dictate when the economy can fully reopen. His remarks were an unusual acknowledgement by a Fed chair that the economy may be contracting even before data confirms it.
STOCKS: S&P 500 e-mini futures EScv1 pared losses and were last off about 0.9%, pointing to a lower open for the benchmark index.
TREASURIES: Yields rose slightly: The two-year note yield was last at 0.308% and the 10-year yield was at 0.792%
DOLLAR: The US dollar index =USD briefly pared losses and was last off 0.69%
EDWARD MOYA, SENIOR MARKET STRATEGIST, OANDA, NEW YORK
“Many people were expecting a record jobless claims number just based on initial state-by-state reports. And it is, but ultimately no one is really surprised at this number. The dollar is sort of all over the place. Some people were expecting as high as 5 million, so we came in the middle of the range of expectations. But it’s going to get worse.”
CHARALAMBOS PISSOUROS, SENIOR MARKET ANALYST, JFD GROUP, CYPRUS
“The key points for me are that he said the Fed is not going to run out of ammunition and that the committee still has policy room for more action.
“By saying that he raises the question – will they go for negative interest rates? Because the Fed has not been in favor of negative rates. Now it remains to be seen whether the virus situation will lead to the exception of cutting into negative territory.”
“I agree with his comment that the economic activity could resume in the second half of the year, but with a condition. We need to have a vaccine ready for distribution and the slowdown of the whole situation for economic activity to rebound again.
“The whole situation has not reached a peak yet and we cannot say that the situation has slowed, in my opinion.”
“And I also agree with the fact that there is nothing fundamentally wrong with the economy. Before the outbreak, the U.S. economy was performing pretty well.”
Compiled by Alden Bentley