Jobless claims expected to spike to a record-breaking number in the millions.
The shutdown of large swaths of the economy has resulted in what is expected to be the largest layoff of American workers ever in a short period of time.
The filings figure, which will be released Thursday before U.S. markets open, will be the first indication of how hard the labor force is being hit by the abrupt shutdown of a large part of the U.S. economy by the coronavirus pandemic. "It will be closely watched as a measure of how violent the shutdowns have been to the labor market," said Jon Hill, fixed income strategist at BMO. "You have 15.8 million people working in leisure and hospitality, and you just shut down the industry."The speed at which the economy shut down is unprecedented, and economists usually look to a slow build in weekly unemployment claims as an early warning signal of an economic slowdown.
Economists now expect that the economy has entered a recession and the trough will be in the second quarter, with many forecasts of a record double-digit decline in GDP. The economy is expected to be less impacted or in recovery in the third quarter, and then rebound in the fourth quarter.The speed at which employees can return to their jobs and the economy to rebound will depend on how quickly the virus can be stopped from spreading.
Gapen said he expects GDP to trough in the second quarter with a decline of 7%, but if the virus is more severe, it could decline by 10%. By the same measure, he said unemployment could be about 7% or as much as 9%.
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