It's no surprise that initial jobless claims in the United States hit record levels this past week, but the actual number may have caught some off guard.

Consensus estimates, which were probably always going to be conservative in nature, called for about 1.6 million. The actual figure of 3.28 million underscores just how deeply the coronavirus is effecting American workers.


Honestly, I wouldn't have been surprised if the number was higher. But if you thought this week's reading was bad, it's likely about to get even worse.

There are stories all over the news about unemployment offices experiencing huge backlogs of claims to be processed, leading to headlines like this...

Screen Shot 2020-03-26 at 7.48.28 AM

If thousands of people can't even make a claim because they literally can't even get in contact with someone in the office, how many people are actually out there that wish to make a claim?

If we're at 3.28 million, I would expect next week's figure to be in the 4-5 million range. And don't forget that any coronavirus relief package coming out of Congress could lead to more layoffs ahead.

How the markets react, of course, depends on how much bad news has already been priced in. The Thursday pre-market S&P 500 futures contracts actually went up following the report, but there are a lot of factors in play. I'd expect stocks to react relatively little to future reports since we now have a baseline expectation to work with, something we didn't have coming into this week.

What does this mean for the unemployment rate, which has steadily been hovering below 4%? It's probably headed towards 10% in the short-term.

Seems like the coronavirus recession has officially arrived!

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