Expect (At Least) Another 6.5 Million In Jobless Claims

Two weeks ago it was a record 3.3 million initial claims;  last week it was an  additional 6.6 million in initial claims for a two-week total of 10 million Americans having just lost their jobs.

Tomorrow, Wall Street consensus expects another 5.5 million in initial claims to have been filed although the truth is that nobody has any idea how to quantify and estimate what is essentially the US economy sliding into an economic depression (supposedly a short one, but again, who knows). For the second week in a row, Pictet analyst Thomas Costerg remains the most bearish with a 7.5 million forecast, which if accurate would mean that approximately 18 million Americans - 11% of the labor force - have filed for unemployment benefits in the past three weeks.

Drilling down into the number we use BofA's forecast which is in between the median and the high at 6.5 million. According to the bank, "local news covering developments in various states point to national claims remaining near record levels" although as the banknotes, "risks are tilted to the upside given Google Trends data and the CARES Act. Seasonal adjustment will be a negative offset."

Some more details:

After reviewing data from local news reports to gather an assessment by state, BofA thinks that 6.5 million claims is a reasonable forecast. For 16 states, the bank found either specific information or enough to back out an implied number, calculating a total of 2.3mn for the upcoming report which matches the week ending March 28 for these 16 states.

Assuming the other states come in similar to the week prior, we are on track for close to 6.5 million jobless claims.

That said, the risks are clearly tilted to the upside (i.e., a much higher claims print). There were broad signs that state governments were increasing hiring or shifting resources to better process filings for unemployment benefits given the deluge in recent weeks. Some states believed the worst was yet to come. Picking up on our analysis from last week, BofA notes that data from Google Trends reveals further pickup in searches for "unemployment benefits" and "filing for unemployment," which could argue for upside.

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