- Bankrate senior economic analyst Mark Hamrick predicts the downturn could be worse than the Great Recession.
- The coronavirus pandemic is continuing to force massive layoffs across the country.
- View more episodes of Business Insider Today on Facebook.
Unemployment filings in the US last week surged to an all-time high of 3.28 million, according to data released on Thursday, as the coronavirus pandemic continues to force massive layoffs across the nation.
The figure far exceeds the consensus analyst forecast of 1.5 million, and is 12 times higher than the 281,000 claims filed the previous week.
These numbers mean the economic downturn caused by the pandemic could be far worse than predicted, according to economists like Bankrate's Mark Hamrick.
"I think this is probably going to eclipse the magnitude of the economic devastation, at least in the short term, of the great financial crisis," he told Business Insider Today. "This is an experiment that we're living out in real time."
"During the financial crisis there was a sense of a slow build and that recession and crisis took a long time to play out. This feels more like a violent earthquake than a rather lower-grade rumble."
States will have to bear the financial brunt of the growing number of unemployment claims. But Hamrick says they may need some help.
"I think much of the increase in funding for unemployment benefits, administered at the state level, will come from the federal government. Because states just can't go to the bank and take out enough money to fund those benefits."
The US unemployment rate is likely to have risen to around 5.5%, labor economist Martha Gimble told The Washington Post , up from 3.5% in February. Last week, Treasury Secretary Steven Mnuchin raised the possibility that unemployment could grow to 20% in March if the government didn't step in.
Hamrick says it's not going to be easy to recover those jobs in the near term.
"We cannot know exactly how long it will take to do that until we get through the worst of the current downturn," he said. "Most people agree that we're already in a recession and we're seeing some horrific forecasts out there in terms of the eventual unemployment rate."
As part of the stimulus bill, the federal government would also give jobless workers an extra $600 a week on top of their state benefits for four months. The House is expected to vote on the bill Friday.
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