US unemployment rate could reach 20%, nearly 2 million more claims expected

As the US Labor Department prepares to release its weekly jobless claims report on Thursday, economists project another 1.84 million Americans have filed for unemployment benefits in the week ending May 30.

This is slightly less than the 2.12 million claims filed in the previous week. More than 40 million Americans have filed for unemployment insurance since the start of the coronavirus lockdown period in March, a figure the US has not seen since the Great Depression.

Continuing claims, which lag behind initial jobless claims data by one week, are expected to total 20.05 million in the week ending May 23, down from 21.05 million the previous week.

“[Last] week’s jobless claims data contains more good news than bad. Continuing claims for the week ending May 16 fell by 3.9 million, to 21.052 million, leading to a drop in the insured unemployment rate to 14.5 percent, from 17.1 percent previously,” Barclays said in a note to clients on May 29. “This likely signals that the hiring rate accelerated and is broadly consistent with our outlook for a near-term peak in the unemployment rate in May, followed by declines thereafter.”

On Friday the government is expected to release its May jobs report. Economists polled by Refinitiv expect the US economy to have shed another eight million jobs in May. That would push the number of jobs lost due to the pandemic to 28.5 million, and the unemployment rate to a record high of 20 percent.

Although economists are predicting unemployment will fall rapidly as people return to work, the economy might not recover quickly. Oxford Economics expects the unemployment rate will remain in double digits by the end of the year.

“We will get back half of the jobs lost by Labor Day,” Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania told Reuters, adding: “The unemployment rate will settle around 10 percent.”

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