Unemployment benefit claims skyrocket to 3.283 million

The COVID-19 pandemic is wreaking havoc on the U.S. economy, and data released Thursday morning reflected the severe damage being done to the labor market.

The number of Americans filing for unemployment benefit claims skyrocketed to a record-breaking 3.283 million for the week ended March 21. Consensus expectations were for 1.64 million claims. The previous record was 695,000 claims filed the week ended October 2, 1982. Initial jobless claims for the week ended March 14 jumped by 70,000 claims to 282,000 and was the largest single-week increase since the Great Recession.

“In previous deep recessions, most notably in 2008 and 1980, initial claims during the worst four weeks of the recession would total 2 [million],” Nomura economist Lewis Alexander wrote in a note to clients March 22. “That is consistent with the shock from COVID-19 compressing a significant deterioration in the labor market into a much shorter period relative to previous contractions.” 

RELATED: Take a look at COVID-19's impact on the markets: 

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Traders work in front of a board displaying the chart of Germany's share index DAX at the stock exchange in Frankfurt am Main, western Germany, on February 28, 2020. - Stock markets plunged further Friday, February 28, 2020, with equities on course for the largest weekly drop since the global financial crisis more than a decade ago on fears that the coronavirus could devastate the world economy, while oil prices tanked as well. (Photo by Daniel ROLAND / AFP) (Photo by DANIEL ROLAND/AFP via Getty Images)
28 February 2020, Hessen, Frankfurt/Main: An exchange trader at the Frankfurt Stock Exchange looks at his monitors. The most important German leading index, the Dax, fell by more than 5 percent in the morning. Concerns about a corona epidemic have been weighing on financial markets worldwide for days. Photo: Boris Roessler/dpa (Photo by Boris Roessler/picture alliance via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
NEW YORK, NY - FEBRUARY 27: Traders work on the floor of the New York Stock Exchange on February 27, 2020 in New York City. With concerns growing about how the coronavirus might affect the economy, stocks fell for the fourth straight day. The Dow Jones Industrial Average lost almost 1200 points on Thursday. (Photo by Scott Heins/Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
The TSE Arrows market centre is seen at the Tokyo Stock Exchange (TSE) in Tokyo on February 26, 2020. - Tokyo stocks opened lower on February 26 extending losses on Wall Street, as the coronavirus continued to spread and public officials warned of the increasing likelihood of a pandemic. (Photo by Kazuhiro NOGI / AFP) (Photo by KAZUHIRO NOGI/AFP via Getty Images)
A pedestrian stands in front of an electronic quotation board displaying share prices of the Nikkei 225 Index in Tokyo on February 26, 2020. - Tokyo stocks opened lower on February 26 extending losses on Wall Street, as the coronavirus continued to spread and public officials warned of the increasing likelihood of a pandemic. (Photo by Kazuhiro NOGI / AFP) (Photo by KAZUHIRO NOGI/AFP via Getty Images)
TOKYO, JAPAN - FEBRUARY 25: Pedestrians wearing face masks walk past a monitor displaying the Nikkei 225 index and other financial figures outside a securities firm on February 25 in Tokyo, Japan. The Nikkei index dropped more than 3.5 percent at the open on Monday as global concerns grow about the economic impact of the Coronavirus. (Photo by Tomohiro Ohsumi/Getty Images)
NEW YORK, NY - FEBRUARY 25: Traders work through the closing minutes of trading Tuesday on the New York Stock Exchange floor on February 25, 2020 in New York City. Fueled by deepening concerns of the Coronavirus becoming a global pandemic, the stock market plunged Tuesday, with the Dow Jones Industrial Average losing almost 900 points. (Photo by Scott Heins/Getty Images)
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[See Also: The computers can't handle the spike in unemployment claims: Connecticut governor]

Uncertainty is high, and so the range of estimates for Thursday’s report was unusually wide. Economists at Citi estimated claims would explode to 4 million. Meanwhile, UBS economists estimated the tally would come in at 860,000.

Alexander noted that the sudden spike in weekly initial jobless claims will likely not persist for long at these elevated levels; however, it implies that non-farm payroll job losses could be heavily front loaded relative to previous recessions which means the unemployment rate could rise even more rapidly.

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Jobless claims are about to explode.

Recent indications from individual states pointed to initial jobless claims in the millions.

“Early state reports this week indicate initial claims for the week ended March 21 will rocket well over one million next week—and possibly as high as three million,” Wells Fargo wrote in a note March 20. “That would surpass anything we saw during the financial crisis and could be upwards of three times the all-time high in claims set back in 1982. This will shock even the most bearish forecasters. As economic activity is grinding to a halt, the U.S. economy is quickly catapulting into a recession.”

Connecticut was expected to see approximately 80,000 claims last week, according to data compiled by Morgan Stanley.

“The [unemployment claims] are going through the roof,” said Connecticut Gov. Ned Lamont in an interview with Yahoo Finance. “The computer system has reached its threshold a couple of times right now.”

[See Also: Unemployment insurance: What it is and how to get it]

In addition, many states waived requirements that recently laid off workers must wait one week before filing a claim. States that were likely to see the largest increases in weekly jobless claims include California, Pennsylvania, New York, Florida and Ohio.

The rapid spread of the coronavirus has led to massive business disruptions in the U.S. over the past several weeks. A growing number of cities across the country ordered residents to “shelter in place,” and non-essential businesses such as sit-down restaurants and retail stores have been forced to shut their doors. As a result, the pace of layoffs has been swift.

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Source: Google 

While the U.S. senate unanimously approved a $2 trillion fiscal stimulus package late Wednesday evening, many believe it may be too late to prevent the damage done to the U.S. labor market. Google searches for “unemployment benefits” have surged over the past month in the U.S. The upward trend began March 11 before peaking on March 20. President Donald Trump declared the COVID-19 outbreak a national emergency on March 13.

There are currently more than 487,600 confirmed cases of coronavirus worldwide and 22,029 confirmed deaths as of Thursday morning, according to Johns Hopkins.

This post is developing. Please check back for updates.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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