Roughly 6.6 million Americans applied for unemployment in the past week, according to data released by the Department of Labor on Thursday.
The new data is significantly higher than economists’ expectations, who predicted around 5 million lost jobs, according to The Wall Street Journal. For the past three weeks, more than 16 million people have filed for unemployment, largely due to coronavirus-related business closures.
The Department of Labor also revised last week’s 6.6 million weekly claims number, then the highest in U.S. history, up to 6.8 million.
The flood of unemployment claims has swamped state and local governments responsible for dolling out the insurance payments. Crashing websites and clogged phone lines are causing long delays for an untold number of applicants. Economists are unsure when the historically high unemployment numbers may peak. Experts worry that as unemployment rates across the country rise, the chances of a fast economic recovery are slipping away.
“The biggest direct impact of the loss of jobs is going to be the loss of income and therefore the loss of spending,” University of Illinois assistant economics professor Jacob Robbins said.
The Federal Reserve unveiled a sweeping set of programs to provide small and mid-sized businesses with up to $2.3 trillion in loans, according to the Wall Street Journal. The economic relief is aimed at keeping businesses afloat through the pandemic, allowing owners to cover costs such as rent and payroll while government orders keep their doors locked.
“Our country’s highest priority must be to address this public-health crisis, providing care for the ill and limiting the further spread of the virus,” said Federal Reserve Chairman Jerome Powell in a statement. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
Last month, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, warned that the coronavirus and the subsequent shutdown of large parts of the economy through government orders would be like “a natural disaster hitting the whole economy at once.”
“Except for food and grocery stores, most other sectors are all being squeezed at the same time, across industries,” Kashkari said. “All these firms are drawing down bank lines of credit because they’re scared. That’s the mechanism by which this natural disaster is going into the financial system.”
Roughly a third of apartment renters failed to pay rent in the first week of April. The National Multifamily Housing Council, a landlord trade group, tracked the payments of 13.4 million units across the U.S. and found that 31% missed making any amount of rental payment in the first week of the month, up from 19% who missed paying rent in the first week of March.
Tom Barrack, chairman and chief executive officer of Colony Capital Inc., warned last month that the U.S. could be on the verge of an economic crisis worse than the Great Depression if the commercial-mortgage market begins to collapse.
“To keep people employed, you have to support the employers,” Barrack told Bloomberg. “The biggest part of employer expense is rent. When commerce stops and they can’t pay rent and they can’t pay interest on the debt, and then the banks and the intermediaries can’t pay their investors, it all collapses.”