The economic fears that have followed the coronavirus shutdown in the U.S. are starting to become grim realities.
Initial claims for unemployment insurance shot up by 3 million for the week ended Saturday to a seasonally adjusted 3.3 million. The sharp increase follows a jump in jobless claims from the prior week, when 70,000 people applied for unemployment protection.
While reporting the dramatic surge, the Labor Department said: “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.”
Besides the knee-jerk stock market, weekly jobless claims offer perhaps the closest thing to a real-time read on the broad economy, which is usually measured more in months, quarters and years.
So far, most major retailers that have closed their stores — by choice or government mandate to slow the spread of COVID-19 — have kept their workers on the payrolls, presumably with the help of business interruption insurance in many cases.
Some stores such as Walmart, Costco and Target are open and doing a brisk business, at least in essentials like food, but for the companies that remain dark or are operating with only a web site, if at all, job losses are seen as inevitable.
Nordstrom Inc. said late Wednesday that it would require “a smaller workforce to execute on the critical activities of the business during this time. As a result, it will be furloughing a portion of corporate employees starting April 5 for six weeks. Impacted corporate employees will continue to receive enrolled benefits.”
People who are not receiving pay, wanting a job and able to work can generally apply for unemployment.
Before the crisis, the nation’s unemployment rate stood at an extremely low 3.5 percent and is expected to soar dramatically, perhaps to 20 percent or higher by some estimates, as people stay at home.
Perhaps China, where the outbreak started, offers something like hope as it is starting to open back up from quarantine — at least for now.
Tapestry Inc., which operates the Coach, Kate Spade and Stuart Weitzman, said Thursday morning that its stores would stay closed another two weeks in North America and Europe, but that nearly all of its stores in China are reopening and that consumers are “gradually returning.”