US weekly jobless claims hit 5.2 million, wiping out all jobs created since the Great Recession in just 4 weeks

• The Labor Department reported on Thursday that 5.2 million Americans filed for unemployment insurance in the week that ended April 11.
• That brings the four-week total to roughly 22.03 million, a record for a period of that length.
• It also means that coronavirus-led layoffs have effectively erased the 22 million jobs that the US economy added in the period following the Great Recession that struck the nation from 2007 to 2009.
• The weekly report showed that claims declined from last week, indicating a downward trend.
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In just four weeks, coronavirus layoffs have erased more than a decade of record job creation.

US weekly jobless claims were 5.2 million for the week ending April 11, according to a Thursday report from the Labor Department. Claims declined slightly from the previous week, when 6.6 million Americans filed for unemployment insurance.

The report brings the four-week total of displaced American workers filing for unemployment to 22.03 million. It also means that coronavirus-led layoffs have effectively erased the 22 million jobs that the US economy added in the period following the Great Recession that struck the nation from 2007 to 2009.

"We wiped that out so fast," Heidi Shierholz, senior economist at the Economic Policy Institute, told Business Insider. "It's mindboggling."

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The weekly unemployment claim figure is the latest economic data confirming the severe damage of the coronavirus pandemic to the US economy. In addition to staggering record unemployment, consumer sentiment has plummeted, retail sales posted a historic drop, and US factory output has declined the most since 1946.

The last month has been particularly painful as it represents a period when most states in the US banned nonessential business and encouraged people to stay at home to curb the spread of COVID-19.

Economic stimulus amid the coronavirus pandemic

There is some help on the way. At the end of March, President Donald Trump signed a $2.3 trillion coronavirus package, called the CARES Act, to provide relief to Americans and businesses impacted by the crisis. People have started to receive $1,200 stimulus checks, and small businesses have started applying for loans. Another round of stimulus is currently being considered.

In addition, the Federal Reserve has gone beyond its financial crisis toolkit to provide sweeping aid to businesses as well as state and local governments. Fed Chairman Jerome Powell has said that the central bank will continue to do whatever it takes to support the US economy amid the crisis.

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The expanded unemployment benefits from the CARES Act could boost jobless claims over the coming weeks because more people are now eligible, according to economists at Bank of America. In addition, claims may remain elevated as states continue to work through massive backlogs of people struggling to get through the system.

"It's important to note that anyone can file an initial jobless claim even if they are not eligible, which can lead to an inflated number," Bank of America economists led by Alexander Lin wrote in a Wednesday note. That means that continuing claims is an important figure to watch as well, as it represents those actually receiving benefits.

Layoffs are spreading to new industries

Still, the weekly jobless claims data offers "the best, and almost real-time, guide to the big picture," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Thursday note.

Last week's report showed that people in industries even outside leisure, service, the arts, and restaurants had started filing unemployment claims. Unemployment filings were also seen from the manufacturing, healthcare, construction, transportation, and warehousing sectors.

That was "a little disturbing," Daniel Alpert, co-creator of the U.S. Private Sector Job Quality Index, told Business Insider, as it indicates that layoffs are moving beyond front-line workers that may have been immediately cut from jobs deemed nonessential business.

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This could also be due in part to the slow rollout of the Small Business Administration's $350 billion Paycheck Protection Program, which is giving businesses funding for payroll costs to curb layoffs. But, there have been issues with the program, including reports of a difficult and lengthy application process, and technical problems with the system, including a crashing website.

This "has potentially led to avoidable layoffs or furloughs in white-collar service sectors administrative, professional, technical, management and sales positions," Alpert said.

What economists are watching next

Economists will be looking for a trend of declining claims over the next few weeks, as the coronavirus outbreak subsides and governments weigh reopening the economy. The hope is that claims will continue to decrease as layoffs eventually taper off.

Still, the swiftness of record-breaking claims has been eye-opening. Economists had forecast that claims would peak around 20 million at the end of the month, a milestone reached much sooner. Job losses of that level could push the unemployment rate to 15% or higher.

Unemployment filings are only part of the story - they could be potentially counterbalanced by hiring numbers, or how many people quit their jobs. But data has shown that job openings are falling, so any offset would likely be small.

And, even if the overall trend of unemployment claims declines, economists are still expecting millions of filings each week - higher than even the worst week of jobless claims during the Great Recession.

"We still have millions to go over the next couple of weeks," Shierholz said. "But I do think it will start tapering off."

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