US weekly jobless claims hit 2.1 million, bringing the 10-week total to more than 40 million

That brings the 10-week total to 40.7 million. But Thursday's report also marks an eighth straight weeks of declining claims.
Continuing claims were 21 million for the week ending May 16, down from the previous report's record of more than 25 million.
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Millions more Americans filed for unemployment insurance last week as the coronavirus pandemic continues to spur layoffs.

US jobless claims totaled 2.1 million for the period that ended May 23, the Labor Department said Thursday . That matched the median economist estimate .

The figure raised the nine-week total to 40.7 million. That's more than the roughly 37 million people who filed unemployment-insurance claims during the year and a half of the Great Recession.

Still, unemployment filings last week fell from nearly 2.4 million in the previous week . The number of new filings has now declined for eight straight weeks.

initial claims week ending 5 23 Andy Kiersz/Business Insider

Continuing claims which represent the aggregate total of people actually receiving unemployment benefits were 21 million for the week ending May 16, suggesting a slow labor-market recovery, despite signs of economic reopening. Still, it was down from the prior week's record of 25 million.

"At this pace, claims won't be back below 1 million until September, though we expect the gradual reopening will start soon to push claims down more quickly," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Thursday note.

Thursday's report is the latest picture of the US labor market as the economy reopens from swift and strict lockdowns put in place mid-March to contain COVID-19. Mass layoffs since then have been devastating. April's jobs report showed employers slashed a record 20.5 million jobs in the month , and the unemployment rate surged to 14.7%, the highest since the Great Depression .

Recovery on the way?

There's hope that the worst is over the in the labor market. As of Memorial Day weekend, all 50 states had relaxed at least some of the restrictions from coronavirus lockdowns. That means some of the millions of Americans that've been furloughed or laid off due to the pandemic should be able to return to work soon.

Economists will continue to monitor both initial jobless claims and continuing claims for signs of a rebound or further deterioration in the labor market. So far, the pace of decline has been more "glacial" than expected, James Knightley, chief international economist at ING, wrote in a Thursday note.

"It is possible that some businesses that had continued paying staff in the hope of a swift re-opening process now recognise that social distancing constraints mean that business will not return to 'normal' quickly," said Knightley.

If this is the case, it means that they're now adjusting their workforce for the new environment, and jobless claims may see "only modest declines for a good few more weeks," he said.

Still, claims remaining elevated longer throws further cold water on any hopes of a swift economic recovery. High unemployment can weigh on consumer sentiment and spending, which is a cornerstone of the US economy.

"As workers remain unemployed, concerns will grow regarding temporary unemployment becoming permanent, employee networks drying up and skills getting rusty," Jason Reed, a professor of finance at the University of Notre Dame's college of business, told Business Insider. "Although it's too soon to know now, the concern is that unemployment will continue to be an issue even after we begin the recovery."

The upcoming May jobs report

Economists and industry watchers are also awaiting the May nonfarm payrolls report, due next Friday, June 5. Job losses are expected to decline from April's record 20.5 million, but remain elevated.

The unemployment rate, however, could surge even higher from 14.7%, as nearly 16 million Americans have filed for unemployment insurance since the measurement period for the April report.

Economists expect that will translate to an unemployment rate of about 20%, a jump that threatens the all-time record estimate of roughly 25% unemployment during the Great Depression. In addition, Knightley of ING expects the May report will show only 47% of working-age Americans earning a wage.

"It is clear that because of social distancing constraints, consumer anxiety relating to the virus and household incomes feeling the strain with tens of millions of Americans out of work, unemployment will not drop anywhere as quickly as it spiked," said Knightley.

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