Morgan Stanley expects weekly US jobless claims to spike to a record 3.4 million

REUTERS/Rick Wilking

• Morgan Stanley chief US economist Ellen Zentner expects that jobless claims released on Thursday will be 3.4 million, she told CNBC during a Tuesday interview.
• Unemployment claims gained last week as coronavirus-induced layoffs began amid slowing US economic activity. 
• Other firms such as Goldman Sachs also expect a massive jump in weekly jobless claims numbers. 
• Read more on Business Insider.

Economists are predicting historic job losses in the US labor market as the coronavirus pandemic rages on.

Morgan Stanley chief US economist Ellen Zentner expects that jobless claims released on Thursday will be 3.4 million, she told CNBC during a Tuesday interview. Thursday’s report from the Department of Labor will show unemployment claims for one week ending March 21. 

Job losses of more than 3 million in one week is “incredible,” Zentner told CNBC. “It’s a stop in economic activity.” 

Other economists have been forecasting a massive spike in jobless claims after last week’s data jumped 70,000 to 281,000 total. Goldman Sachs expects that the unemployment claims number will jump to a high of 2.25 million as coronavirus-induced layoffs occur, while Pantheon Economics tentatively forecast losses in the range of 2 million to 3 million.

All of these forecasts would be a stunning jump in unemployment claims and far exceed the current record of nearly 700,000 set in 1982. 

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A US recession is widely thought to be inevitable at this point as economic fallout from the coronavirus pandemic continues. Morgan Stanley forecasts US gross domestic product will plunge as much as 30.1% in the second quarter of the year, following a sharp drop-off in activity in March. 

That extreme plunge could push the unemployment rate from current historic lows to an average of 12.8%, one of the highest on record since the 1940s, according to the bank. 

Still, Morgan Stanley expects that the US economy could rebound as businesses and consumers return to normal following the coronavirus outbreak. 

“What we’re now focusing on is what the shape of growth will look like on the other side of that as the social distancing measures start to recede,” Zentner said.