Initial claims for unemployment insurance totaled 3.17 million for the week ending May 2, marking the seventh consecutive week of massive numbers of layoffs (see chart), and dwarfing the previous high of 695,000 in October 1982.
During the Great Recession in 2008-09, total job losses were 8.7 million over 25 months versus the current 7-week total of 33.5 million initial claims (see chart). The peak number of unemployed people for the Great Recession, as measured in the household survey portion of the monthly Employment Situation report, actually occurred in October 2009, four months after the official end of the recession, and was 15.4 million (see chart). The unprecedented flood in claims is part of a tsunami of negative economic statistics that reflects the impact of the COVID-19 outbreak and the drastic policy reactions implemented to contain the spread.
The national Employment Situation report is due out on Friday, May 8 and is expected to show a drop of 22 million in nonfarm jobs while the unemployment rate is expected to surge to 16 percent. The previous cycle peak in the unemployment rate was 10 percent in October 2009 while the highest unemployment rate since 1950 came in November 1982 at 10.7 percent. Though data collection was much less reliable, the unemployment rate following the Great Depression was estimated to have peaked at 25 percent in 1933.
The sharp rise in layoffs over the last seven weeks has crushed the labor market, consumer confidence and retail spending. Expect extraordinarily weak economic reports over the next several months.