Record Number of UI Claims: A Look at the Economic Situation by Our Economist

March 27, 2020

A record 3.3 million new claims for unemployment benefits was met with an equally impressive fiscal policy response that will likely result in a relatively short but sharp recession—unless the efforts to get the virus under control are not successful.

The number of new UI claims is likely to be startlingly high for the next few weeks; on a related note, more than 10 million people may be unemployed when the April jobs report comes out on May 8th.

$6.2 trillion in financial relief—the largest fiscal and monetary response to any crisis since WWII—including $4 trillion in lending power for the Federal Reserve and $2.2 trillion in the CARES Act, along with lower gas prices, will hopefully set the stage for a robust recovery.

Economic growth is forecast to drop by 12% to 30% in the second quarter as the virus is brought under control before increasing between 12% and 29% in the third quarter.

Outlook:  Much depends on how confident Americans will be in June that the virus threat has passed and how willing they will be at that point to go on vacation, take flights, visit restaurants, and return to some level of a new normal.