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The weekly jobless claim report showed on Thursday that 6.6 million made an initial claim for unemployment insurance. Analysts at Wells Fargo, now expect the unemployment rate to surge to more than 15% by June.

Key Quotes: 

“It now seems likely that we have passed the peak of layoffs, but the extent of the damage from COVID-19-related shutdowns is staggering—a cumulative 16.8 million people have filed for unemployment benefits in just three weeks.”

“We look for the economy to shed more than 20 million jobs in the second quarter, which implies that by June the level of nonfarm payrolls will stand 14% below their February 2020 peak. To put that number into perspective, consider that payrolls fell 6% over a two-year period beginning in January 2008. This nosedive in payrolls translates into a moonshot in the unemployment rate, which we forecast will soar to more than 15% by June. But we also look for the labor market to start to recover this summer.”

“We look for GDP growth to turn positive again in the third quarter as the economy starts to emerge from the lockdowns that have been ordered in most parts of the nation. The fiscal measures that Congress has put in place in recent weeks are meant to support businesses and households during the coronavirus-induced lockdowns.”

“We look for very rapid growth in nonfarm payrolls in the second half of the year, which should cause the unemployment rate to recede considerably.”

“We look for robust job growth starting later this summer, we forecast that payrolls at the end of 2021 will remain nearly 3% below their peak in February 2020. The unemployment rate, which stood at a 50-year low of 3.5% in February, should still exceed 6% at the end of next year.”