Economists expect another week of declining unemployment claims as coronavirus layoffs begin to slow

• The median consensus estimate is that 3.5 million Americans filed for unemployment insurance in the week ending April 25. The Labor Department will release official numbers Thursday.
• While still an eye-popping number of jobless Americans, the estimate would be the fourth week in a row of declining claims.
• It could signal that coronavirus-induced layoffs are slowing as some states begin to reopen their economies.
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Economists are expecting another week of declining unemployment claims, showing that coronavirus layoffs may be slowing as some states begin to reopen their economies.

As of Tuesday, the median consensus estimate is that 3.5 million Americans filed for unemployment insurance in the week ending April 25, according to Bloomberg data. While still elevated, the estimate would be the fourth consecutive week of declining claims.

Unemployment insurance claims skyrocketed as the US shut down major parts of its economy to curb the spread of COVID-19. The job losses have been eye-popping — in just five weeks, 26 million Americans have filed for unemployment benefits, erasing all jobs created since the Great Recession in 2007-2009.

The official Labor Department report due Thursday will come one day after data showed that the US economy contracted at an annualized rate of 4.8% in the first quarter, even before the full impact of the coronavirus pandemic hit. Economists expect that US gross domestic product will fall even further in the second quarter, all but confirming a US recession.

While the weekly jobless numbers are still painful, they are heading in the right direction. Last week's report showed 4.4 million claims in the week ending April 18 — the third consecutive week of declines — helping to solidify the downward trend, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Some feared claims would spike again, "on the grounds that claims would rebound after the holiday week, but any post-Good Friday rebound was swamped by the trend," said Shepherdson.

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Going forward, it's expected that claims will continue to fall, although some economists expect the decline to be a gradual one.

"The rate of fall of Google searches for 'file for unemployment' has slowed, suggesting it will take several more weeks before claims drop below one million," Shepherdson wrote.

Other economists agree. On Wednesday, Bank of America's Alexander Lin and Michelle Meyer revised their estimate to 4.1 million for the week ending April 25, up from 3.5 million, according to a note.

"This would still mark an improvement from 4.4mn in the prior week, but reflects slower progress," the economists wrote.

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