Goldman Sachs predicted that a record 2.25 million Americans could enter claims for unemployment benefits this week as coronavirus-driven layoffs hit the labor market. The outbreak has forced cities to shut down and prompted people to stay at home to combat the virus’ spread.
“State-level anecdotes point to an unprecedented surge in layoffs this week,” David Choi, one of the bank’s economists, said in a research note. “Consumer spending on sports and entertainment, hotels, restaurants, and public transportation in particular have already dropped dramatically.”
Unemployment filings last week jumped by 70,000, to 281,000, according to Labor Department data published on Thursday. Goldman’s forecast of 2.25 million suggests it will increase eight-fold this week, blowing past the record of nearly 700,000 set in 1982.
Fears about the coronavirus outbreak have decimated demand across industries such as airlines and hotels, and governments have scrambled to slow the spread by closing 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. The New York State 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, Gov. Gavin Newsom told The Sacramento Bee.
The Goldman economists cautioned that claims might tail off in the second half of this week or that 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.”