US unemployment claims increased by a record 3 million in the week ending 21 March, as the fallout from the coronavirus pandemic continued.
The US Department for Labor (DOL) said the advance figure for seasonally adjusted initial jobless claims almost reached 3.3 million last week, up from 282,000 the previous week.
It was the biggest level of seasonally adjusted initial claims in the history of the seasonally adjusted series, far outweighing the previous high of 695,000 in October 1982.
The further unemployment rises, the deeper the economic downturn will be and the longer it will last as productive capacity is eroded."
In its report, the DOL said "nearly every state providing comments cited the Covid-19 virus impacts".
"States continued to cite services industries broadly, particularly accommodation and food services," the report said.
"Additional industries heavily cited for the increases included the health care and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing industries."
Seema Shah, chief strategist at Principal Global Investors, said while markets had been expecting "awful" figures so may not be moved, "the information is worrying".
"The further unemployment rises, the deeper the economic downturn will be and the longer it will last as productive capacity is eroded," said Shah.
"The implications for policymakers is clear. The [$2trn] fiscal package as announced is a positive, but may need to be tweaked in order to provide more protection to workers and give incentives to businesses to furlough workers instead of letting them go.
"If they are able to slow the rise in jobless claims over the coming weeks, harvesting the economy's productive potential, the US may be able to limit this downturn to just a couple of quarters and enable a rapid recovery to get underway once containment measures are eventually lifted."
Predictions for the figure varied widely, but the impact Covid-19 would have on the jobs market longer term is expected to be vast. Research firm Capital Economics expects employment to eventually decline by 14m and the unemployment rate to spike to 12%.
Federal Reserve Bank of St. Louis President James Bullard recently predicted US unemployment would reach 30% in Q2. Before the virus hit, unemployment had been at 50-year lows.
This article was first published by Investment Week