Jobless claims skyrocket to record 3.28 million

Jobless claims rose to a record 3.28 million ending the week of March 21st as the impact of the coronavirus escalates. Yahoo Finance’s On The Move panel breaks down the latest.

Video Transcript

ADAM SHAPIRO: --Yahoo Finance. We've got a rally again on Wall Street. The S&P 500 is up roughly 85 points. The Dow is up almost 900 points. The NASDAQ up roughly 230 points as we await action in the House of Representatives to pass the stimulus package, $2 trillion, that the Federal Reserve-- or that rather the Senate passed yesterday.

We have heard from Fed Chair Powell. He has said that when it comes to lending, we're not going to run out of ammunition. Also, the "Wall Street Journal" is reporting that the Treasury Department is prepared to take an equity stake in US airlines in return for roughly $25 billion in grants. That could be part of the stimulus deal to help the airlines get through the coronavirus crisis.

We have total cases worldwide approaching half a million. Dead worldwide, about 22,156, and in the United States we are approaching 70,000 cases with 990 souls who have left us.

The big news this morning was the jobless-claims number, 3.238 million-- 3.3 million roughly. This is a record. The last time we had a record high was 1982, almost 700,000 claims. And, of course, during the Great Recession we saw claims around 680,000.

To talk about all of this, I'm joined by today's panel. I've got Akiko Fujita, Jess Smith, Julia La Roche, Julie Hyman, and Brian Cheung. I want to start with Julie Hyman about this historic number. Is it a one off?

JULIE HYMAN: It doesn't seem to be, right? I mean, if we know what percentage of the economy is shutdown, what percentage of people are staying at home, wouldn't be surprising necessarily to see these kinds of numbers persist, at least for a little while. You mentioned that other number that this surpassed. Obviously this has left all other jobless claims-- this isn't just a record. It's left all the others in the dust, even during the financial crisis.

We saw increases in those jobless claims, by the way, in all 50 states and the District of Columbia. The largest increase that we saw was in the state of Pennsylvania, which had nearly 380,000 claims, followed by Ohio. Here in the state of New York, 66,000 claims where, of course, we have seen the highest number of cases. So it looks like it is geographically broad. Also, we know it's broad across a range of different industries.

And, of course, a reminder, Adam, and one of the reasons why additional stimulus is necessary is that unemployment, of course, doesn't cover all of your paycheck, right? It's about half, in most cases, of what you normally would be receiving.

ADAM SHAPIRO: Akiko, I'm curious because we're going to get the actual March labor numbers in April, but the survey, when they get those numbers, is going to be before the worst of the crisis and the economic shutdown was taking place. So how do you gauge unemployment claims and the overall unemployment number going forward?

AKIKO FUJITA: I mean, I think it's really tough to put your finger on it right now. I mean, I'm going to just speak from sort of an anecdotal level here because that number that we got this morning, no question that is a stunning number when you look at the historical context of it, but I'm also hearing reports of, on a very local level, websites for unemployment claims that are not working-- you know, people having to wait online for several hours just to get their claims through, just to ask questions. And then yesterday just in California alone we heard from Governor Newsom saying 1 million people filed unemployment claims in the month of March.

And so to me, that suggests that the number we got today is still going to jump even higher or it could already be even higher. We're just getting a bit of a lag right now.

And I do think it was really interesting. This morning we got those comments from Secretary Mnuchin saying the numbers today are irrelevant because these businesses are going to hire all these people back, and I have to wonder-- there is a real disconnect that I know we've already talked about between, well, what's actually happening in small- and medium-sized businesses and what we're hearing from the secretary. I just have to wonder whether this stimulus is really going to be enough for these businesses to have the confidence to hire those people they've already laid off back.

BRIAN CHEUNG: And to Akiko's point, something else that shows you that the number that we got today, although shocking, might actually still be on the low end is the fact that there's still a lot of people that are being either furloughed or just had their hours reduced, in which case they are both-- in both cases not eligible to actually apply for unemployment insurance. So that all shows that a lot of these types of companies might actually still be retaining employees but paying them less or about to cut them off in a way where we should continue to expect jobless claims to increase, even by magnitudes, in the next few weeks.

So the jobless-claims number, which is something that we get on a weekly read, is something that already we're having questions about, but we have to consider that this is a little bit different when we talk about labor force versus unemployment, as Adam was just illustrating. It is entirely possible that you could have people who are unemployed and are taking unemployment insurance but are still technically part of the searching labor force, which would be reflected under the main headline unemployment statistic.

Important to note, though, that as we get towards that jobs report for the month of March, which we'll see next week, we shouldn't see the full reflection of the COVID-19 impact because of the fact that that survey was done about two weeks ago before the full onset of a lot of these layoffs. So we won't really get a full picture of that until we get the April jobs report, which as we know will come out in the first week of May. So the bad data could continue for many months.