The COVID-19 pandemic rages on, and the damage being done to the U.S. economy is only getting worse.

The U.S. Labor Department released fresh data on Thursday morning that showed the effect of the novel coronavirus on employment in the U.S. The number of Americans filing for unemployment benefits spiked to a record-breaking 6.648 million for the week ending March 28. Consensus expectations were for 3.76 million claims. The prior week’s figure was revised higher to 3.307 million claims from 3.283 million. Prior to the week ending March 21, the previous record was 695,000 claims filed the week ended October 2, 1982.

View photos (David Foster/Yahoo Finance) More

“The deterioration of the labor market in the past two weeks almost defies belief,” Nick Bunker, Indeed Hiring Lab's director of economic research, wrote in an email Thursday. “Since March 14, approximately 3.8% of the working age population has filed for unemployment. For context, during the Great Recession, the share of the population dropped 4.6 percentage points from December 2007 to December 2009. That took two years. The labor market is in a historic freefall."

Though consensus estimates were for 3.7 million initial jobless claims for the week ended March 28, the range of estimates on Wall Street were wide, but the major firms expect the number to be in the millions. On the high end, Goldman Sachs expected 6 million claims for the week. Not far behind were Bank of America and Pantheon Macroeconomics expecting 5.5 million claims, while on the lower end, JPMorgan Asset Management predicted 2 million claims.

“Claims are likely to remain elevated throughout April, especially as more business owners and workers learn about the more generous unemployment insurance benefits included in the Phase 3 legislation,“ Goldman Sachs economist David Mericle argued.

Early data from individual states pointed to more pain ahead for the labor market.

“Based on our read, 22 states are expecting approximately 2.5mn unemployment insurance (UI) claims, up from the prior week's official non-seasonally adjusted figures of 1.4mn,” Bank of America economist Michelle Meyer said in a note Wednesday. “Meanwhile, several other states have given general guidance that UI claims will be higher in the upcoming report. A rough back-of-the-envelope calculation extrapolating out to all 50 states would imply close to 5.6mn new UI applications.”

Market participants should pay particular attention to revisions to the prior week, according to Meyer.

“Normally revisions are modest and inconsequential,” Meyer explained. “However, state UI offices are reporting major backlogs of applications. Thus, we could see major upward revisions as these applications are processed. Moreover, we continue to hear workers unable to apply for benefits due to phone lines being busy and/or websites being down. Both of these factors pose downside risk to our forecast and the numbers reported on Thursday may fail to capture the ‘true’ number of unemployed workers in the labor market.”

In addition, the CARES act that was signed into effect last week expanded unemployment privileges to previously ineligible people such as those who are self-employed and independent contractors. As a result, the number of filers could meaningfully increase.

View photos Source: Google More