6.5 Million Initial Jobless Claims Tomorrow?

6.5 Million Initial Jobless Claims Tomorrow?

Last week, when consensus was expecting a “modest” 281K initial jobless claims, we said that SouthBay Research’s Andrew Zatlin, who has regularly been the most accurate predictor of labor market prints, expected no less than 2.4 million initial jobless claims. He was off by a million: the actual number was a staggering 3.28 million, quadruple the previous record set in the depths of the global financial crisis. The number was also too low in light of anecdotal evidence of the tsunami of unemployed workers, with a New York State official saying that the unemployment system had received a record 1.2 million calls just this Monday compared to 50,000 per week prior to the coronacrisis.

In short, tomorrow’s initial claims print is expected to be another catastrophe, the only question is just how bad will it get and how much above the consensus print of 3.7 million will the actual number be.

The claims report “will likely reflect both newly laid-off workers as well as states catching up on previously filed claims that had not yet been captured in the system due to overwhelming demand,” Wells Fargo economist Sam Bullard wrote in a note. He projects 3.15 million. He is also an optimist compared to some of colleagues.

Going back to Zatlin, he is now expecting around 6.5 million initial claims having revised upward his weekly estimate on at least two prior occasions. “We are in unprecedented waters and fast moving, on-the-ground data requires equally fast updates.  Due to more recent information, I am raising the forecast again”, he wrote in a note to clients, adding the following:

“At least 6.5M Americans filed for Initial Jobless Claims last week. States are unable to process the tidal wave of claims. I now believe that States will stop trying for accuracy and rely on estimates.  After all, funding will flow based on the number they submit and States need to get funding asap.