COVID-19 Leads to Record Unemployment

In the week ending on March 21, there were 3,283,000 claims for insured unemployment, an increase of 3,001,000 from the previous week's revised level. According to the United States Department of Labor, this is the largest increase in history, as the previous high was 695,000 in October of 1982.

“This sudden increase in UI claims reflects the shock to demand in the economy,” said Doug Duncan, Chief Economist at Fannie Mae. “For a large segment of the workforce, the rapidly deteriorating employment situation is due to the spread of the COVID-19 outbreak, as well as the associated policy restrictions and shifts in consumer behavior, both aimed at avoiding infection. We interpret this morning’s release as a strong leading indicator of an expected increase in household financial stress.”

Most states cited COVID-19 virus impacts in their unemployment reports. States continued to cite services industries broadly, particularly accommodation and food services. Additional industries heavily cited for the increases included the health care and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing industries.

In an effort to mitigate the economic impact of COVID-19, Senate Democrats and Republicans agreed to a stimulus package that totals more than $2 trillion early Wednesday morning. Senate passed th economic relief package Wednesday night; it now heads to the House.

"The stimulus bill proposal currently working its way through Congress seeks to address certain features of the UI systems, such as eligibility requirements and the amount and maximum duration of benefits paid, which are intended to help alleviate some of the financial stressed caused by job loss," Duncan continues. "Furthermore, payments to households are designed to make up for lost earnings. Proposed support for businesses is intended to help them survive the shock to demand in order to be positioned to re-hire workers after the virus subsides and demand picks back up.”

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