US Unemployment at 3.28 Million Is Just a Preview... A More Shocking Plunge Begins

Pictet Asset Management Estimates April Unemployment Claims Could Reach 6.5 Million

Largest Department Store Chain Macy's Places Majority of Approximately 130,000 Employees on Unpaid Leave

[Asia Economy New York=Correspondent Baek Jong-min] Macy's, the largest department store chain in the United States, is implementing large-scale unpaid leave due to the impact of the COVID-19 pandemic. Although the department store has not disclosed the exact number of employees on leave, CNBC reported on the 30th (local time) that the majority of the approximately 130,000 employees will be affected. Macy's also stated that it is "transitioning to the minimum workforce necessary to maintain basic operations," meaning that more than 100,000 employees will be in a situation where they receive no pay. In addition to Macy's, stores such as Bloomingdale's and Bluemercury have also suspended all offline operations since the 18th, so the unemployment impact is expected to spread significantly.

According to Bloomberg on the same day, Pictet Asset Management estimated that weekly new unemployment claims in the U.S. could reach 6.5 million in April. The number of claims on the 26th was 3.28 million, but the situation is expected to worsen further after April. Pictet's estimate is higher than those of other Wall Street financial firms, but other firms also foresee millions of new unemployed continuing to file claims. Goldman Sachs expects 5.25 million, and Citigroup anticipates 4 million people lining up to apply for unemployment benefits within a week.

The rapid progression of unemployment due to the COVID-19 crisis has caused monthly survey results to fail to accurately reflect the reality. The unemployment rate for March, to be announced on the 3rd of next month, is inevitably expected to decline compared to February, but it is considered limited in accurately representing the sharply deteriorated employment market situation.

The number of new unemployment claims to be announced on April 2nd is expected to remain high following last week. The median forecast for new unemployment claims compiled by Bloomberg is about 3.5 million. Since the announcement will be made at a time when social distancing and stay-at-home orders have begun in earnest in the U.S., it is possible that the number of claims is higher than expected.

This is also related to the economic growth outlook turning negative. According to The Hill, a congressional media outlet, former Federal Reserve Chair Janet Yellen said at a Brookings Institution virtual event that "this economic downturn is steep" and "it is unlike anything we have experienced in the U.S."

There are also concerns that unemployment benefits are not being properly claimed. This is due to the overwhelming number of applicants. Last week, new unemployment claims in New York State, the most severely affected area by COVID-19 in the U.S., were notably lower than in other regions, which The New York Times analyzed as a result of the inability to process claims normally.

The unemployment benefits department in New York State even requested applicants to submit claims on specific days based on the first letter of their last names.

This shows how serious the situation is, to the extent that a system similar to Korea's public mask purchase method needs to be introduced.

Unemployment rate forecasts continue to rise. On the same day, the Federal Reserve Bank of St. Louis warned that the U.S. unemployment rate could soar to 32.1%. This is higher than the 30% unemployment rate forecast by James Bullard, President of the St. Louis Fed, last week. The St. Louis Fed expects the number of unemployed in the U.S. to increase by 47 million. Adding the current 5 million unemployed, the total could reach 52.8 million. CNBC also presented a staggering estimate that 27.3 million Americans are at risk of losing their jobs in restaurants, beauty salons, and airlines.

Additional measures to mitigate the economic damage caused by COVID-19 are also emerging. Beyond the $2.2 trillion stimulus package signed by President Trump last week, there are movements to prepare further measures. On the same day, the Wall Street Journal reported that additional stimulus plans are being considered mainly in the U.S. Congress. Democratic House Speaker Nancy Pelosi also mentioned the possibility of additional stimulus measures, indicating that the U.S. is already seeking the next phase of response.

This content was produced with the assistance of AI translation services.