Reflecting the shutdown of large swaths of the U.S. economy due to the coronavirus pandemic, the Labor Department released a report on Thursday showing a record spike in first-time claims for unemployment benefits in the week ended March 21st.
The Labor Department said initial jobless claims skyrocketed to 3,283,000, an increase of 3,001,000 from the previous week's revised level of 282,000.
Economists had expected jobless claims to spike to about 1.5 million from the 281,000 originally reported for the previous week.
With the record-breaking increase, the number of seasonally adjusted initial claims reached the highest level in the history of the seasonally adjusted series. The previous high was 695,000 in October of 1982.
While the increase in unemployment claims is staggering, economists noted the data may still underestimate the number of new claims due to constraints on the capacity of offices to process claims.
The report said there were 186,800 new claims in California and 80,300 new claims in New York, which economists said seem low based on anecdotal evidence.
"We would expect numbers from these states and others to climb in coming weeks, particularly with the number of lockdowns increasing across the U.S.," said ING Chief International Economist James Knightley.
The four-week moving average of claims is seen as less volatile but still soared to 998,250, an increase of 765,750 from the previous week's revised average of 232,500.
The report also said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, jumped by 101,000 to 1.803 million in the week ended March 14th.
The increase drove continuing claims to their highest level since reaching 1.824 million in the week ended April 14, 2018.
The four-week moving average of continuing claims climbed to 1,731,000, an increase of 27,500 from the previous week's revised average of 1,703,500.
Next Friday, the Labor Department is scheduled to release its more closely watched report on the employment situation in the month of March.
"Based solely on the historical relationship between claims and the unemployment rate, 3,283,000 equates to an unemployment rate of somewhere between 30% and 40%," said Paul Ashworth, Chief U.S. Economist at Capital Economics.
He added, "We are not suggesting the latter will rise to those levels, but we would be amazed if it didn't exceed 10% by May, if not April."