Experts React To Weekly Jobs Number: 'Unemployment Rate Will Break Through 20%'

The SPDR S&P 500 ETF Trust SPY traded lower by 0.3% on Thursday after the Labor Department reported weekly jobless claims of 5.245 million, bringing the running total for the coronavirus downturn up to 22 million.

This week’s jobless claims were down 1.37 million, suggesting the worst of the negative economic impact from COVID-19 may have finally passed — but the number was still above consensus economist estimates of 5 million. Economists are now expecting the unemployment rate to hit 10% this month, with some estimating it will go as high as 15%.

Several experts have weighed in on Thursday’s weekly jobs number and what it means for investors.

Silver Lining

David Bahnsen, chief investment officer of The Bahnsen Group, said there was a silver lining to this week’s number.

“This is an awful number, but it is lower than the prior two weeks, which were above 6 million jobless claims. I do believe we have peaked,” Bahnsen said Thursday.

Now that investors know just how bad it’s going to get, the $1-million question is how long it will be until the picture starts to improve.

Clock Is Ticking

Mark Hamrick, senior economic analyst for Bankrate, said he’s hopeful many of the job losses are temporary, but it seems inevitable that some companies won’t survive the downturn.

“With no immediate end in sight to efforts aimed at mitigating the virus’ spread and impact, it is impossible to see a near-term upturn in employment prospects,” Hamrick said.

He said employment records are being broken left and right.

“Broadly unknown is how many of these sidelined workers can and will return to their employment in the coming weeks or months.”

Depression-Era Unemployment?

Joseph Brusuelas, chief economist at RSM US LLP, said the U.S. unemployment rate will likely hit 20% before all is said and done.

“The U.S. unemployment rate will break through 20% this spring and likely test the 1933 Depression-era high of 24.9% this year,” Brusuelas said.

Congress needs to step up its game and begin working on a second round of aid for struggling Americans, he said. 

“Each day that aid is delayed will only serve to boost bankruptcies, unemployment and loan defaults on mortgages, auto and consumer credit."

Benzinga’s Take

U.S. President Donald Trump took a lot of heat from critics when he said the country “can’t have the cure be worse than the problem.” As each week passes with the economy shut down, Americans are learning firsthand the devastation that can be caused by a concurrent health and economic crisis. 

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

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