America is still at the beginning of seeing the effects of the coronavirus outbreak on its economy. That means last week's data -- showing nearly 3.3 million Americans filing for unemployment benefits for the first time -- will not have been the last of it for the labor market.
Economists expect 3.5 million people filed for unemployment benefits for the first time last week, according to the Refinitiv consensus estimate. That would set a new all-time high, surpassing the previous week's data.
Bank of America Merrill Lynch (BAC) even expects 5.5 million Americans filed for benefits last week. Barclays expects at least 5 million.
BAML sees three reasons for the spike:
- Major companies have reported layoffs and indefinite furloughs since the last claims data came out
- The CARES act was signed into law and made unemployment insurance benefits more generous. It also expanded eligibility to self-employed and gig-workers who previously were unable to claim these benfits.
- Google trends show an increase in search for "unemployment benefits," the BAML analysts said.
The Economic Policy Institute expects some 20 million American jobs to be lost between March and July, via a combination of furloughs and lay-offs.