MANHATTAN (CN) — The historic passage by the Senate of the $2 trillion stimulus package was eclipsed by another milestone: 3 million new unemployment claims in a week.
According to the Department of Labor, jobless claims rose from 3,001,000 to 3,283,000 for the week ending March 21, nearly a 120% increase and the highest recorded since the department began during the 1960s.
The jobless numbers eclipse the previous high of 695,000 unemployment claims in 1982. They are about five times as high as the unemployment peak during the Great Recession of 2009, which saw 665,000 claims.
Investors were initially undeterred by the bad news. The Dow Jones Industrial Average opened to an increase of 2%, while the S&P 500 and Nasdaq followed closely behind.
Those gains tapered off slightly but markets remained positive five minutes after the morning bell. Futures had dropped early in the morning but had closed the gap following the Labor Department’s announcement.
The largest spikes in unemployment came from Pennsylvania, New Jersey, Ohio and Massachusetts, though every state and U.S. territory saw an increase in claims.
A Labor Department official reportedly had asked states to fudge their numbers. An email obtained by The New York Times showed department administrator Gay Gilbert asking states to use “generalities to describe claims levels” instead of specific numbers.
Despite attempts at obfuscation, high unemployment numbers were not unexpected. Former Trump economic adviser Gary Cohn warned last week that “massive unemployment” was right around the corner, while the United Nations has predicted up to 25 million unemployed worldwide.
Thursday’s trades follow Tuesday’s historic rally after news broke that senators had finally hammered out a deal on advancing a third stimulus package.
The 883-page bill, considered the largest government aid package in U.S. history, passed the Senate 96-0 late Wednesday.
It had been stalled for days amid criticism of a controversial $500 billion fund set up for “distressed businesses” to be paid at the treasury secretary’s discretion. Democrats had slammed the provision as a “slush fund,” but relented now that an inspector general and congressional panel are tasked with overseeing it.
The bill also includes $350 billion earmarked for small businesses and $100 billion to health care facilities dealing with the coronavirus pandemic.
It will move next to a vote Friday in the House, after which the president is expected to sign it.
Markets and Asia and Europe seemed to have been unmoved by the stimulus. Japan’s Nikkei lost 4.5%, while other Asian markets dropped about one point. Australia’s ASX 200, the lone bright spot, rose about 2.3%.
European markets also suffered, falling about 2% across the board by 8:20 a.m. E.S.T.
As a recession becomes almost assured, more fiscal and monetary policy moves may be on the way.
In an interview on NBC Thursday morning, Federal Reserve Chairman Jerome Powell said the central bank is “not going to run out of ammunition” and that it has “policy room in other dimensions to support the economy.”
The Fed has already slashed its interest rates nearly to zero. In another historic move, the central bank earlier this week announced moves to offer open-ended borrowing “as needed” to free up liquidity. The central bank also promised to soon open a lending program for small- and medium-sized businesses.
Cases of Covid-19, the new strain of coronavirus, have more than doubled in the last week, according to data compiled by Johns Hopkins University.
About 487,000 have been affected worldwide, with more than 22,000 deaths. In the United States, which the World Health Organization has warned could become the next epicenter for the coronavirus pandemic, more than 69,000 are confirmed infected while about 1,000 have died from the virus.
Follow @NickRummell
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
