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Breaking: Jobless claims hit 6.6 million last week; Update: CARES Act targeting? Update: 9.6% unemployment?

We knew it would be bad — but not quite this bad. New jobless claims topped 6.6 million the past week, well beyond last week’s stunning record 3.3 million claims and far past the 4-5 million economists projected. The US economy has now lost nearly 10 million jobs in the coronavirus pandemic, an economic disaster of epic proportions:

The torrent of Americans filing for unemployment insurance continued last week as more than 6.6 million new claims were filed, the Labor Department reported Thursday.

Economists surveyed by Dow Jones estimated 3.1 million, a week after nearly 3.3 million filings in the first wave of what has been a record-shattering swelling of the jobless ranks. The week ended March 28 totaled 6,648,000

Before the coronavirus shut down major parts of the U.S. economy, the highest week for claims was 695,000 in 1982. The Great Recession high was 665,000 in March 2009.

If that’s not bad enough, the number could actually be higher. The wave of applicants overwhelmed some state systems, meaning more jobless claims might spill over into the next few weeks even if the layoffs stabilize:

Still, some economists said the actual number of unemployed could be much higher, since many applicants had experienced trouble filing a claim, as state labor departments became overwhelmed. …

Michael Feroli, the chief U.S. economist at JPMorgan, said he had been expecting a “pretty gnarly” number. He and his colleagues forecast 3.5 million applications.

“I wouldn’t want to tell fairytales about why not to worry about it,” he said. “It’s possible we could see large numbers for a couple weeks.”

Still, it appears that markets mainly expected something of this magnitude. The news didn’t bring an immediate sell-off:

Until the relief funds and business loans start getting distributed, we can expect to see more of this. However, once those resources do become available, it’s possible that many of the newly jobless might get recalled back to their previous employers. That was the point of rushing the $2.2 trillion CARES Act quickly through Congress. The trick now is to get Treasury’s distribution of the funds up and running fast, which may be easier said than done:

The race to release $250 billion in coronavirus stimulus aid has cast a new light on a long-understood problem: The machinery of Washington often is lumbering, and in some cases, digitally deficient, complicating even the most well-intentioned attempts to provide Americans relief in an economic crisis.

Twice over the past two decades, the IRS has played a critical role in dispersing aid to workers ravaged by an economic downturn, including the 2008 recession, when the agency sent roughly $100 billion in checks to Americans. But the stakes are far more dire as the coronavirus outbreak in the United States continues to worsen, leaving more than 3,000 dead and millions suddenly jobless.

The sudden downturn threatens to thrust the country into a prolonged recession — unless federal officials can dole out the $2 trillion in new aid to businesses and consumers quickly and effectively. Exactly how and when people receive their share of federal dollars, however, will depend on a mix of still-unfolding factors.

They’d better start figuring it out quickly, while there are still jobs and businesses left to save.

Update: As Jill Schlesinger says, we saw numbers like this before — just not all at once. It took months to add up jobless claims to eight figures in the Great Recession, and the problem is that we might still have a month or so to go before we can start reopening the economy:

Update: We should keep a couple of things in mind with these numbers, too. The scale is wildly unprecedented, but not unanticipated. The CARES Act directly targeted this phenomenon in two ways — individual stimulus payments and expanded unemployment insurance. The people impacted by these layoffs, or at least most of them, will get their full salary on unemployment for the next four months if necessary rather than the usual stipend, so they will be able to keep paying their bills for a while.

It does, however, point out just how important it is to find a way back to normal — and fast.

Update: This was my rough calculation as well:

Don’t expect this to be fully reflected in the March jobs report that comes out tomorrow. Economists expect a job loss in the low-to-mid five-figure range, in part because the surveys on which jobs reports are based took place before employers started shutting down. The April jobs report will be bloody, but if Treasury gets its act together, perhaps somewhat mitigated.

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