Job seekers stand in line at the employment help center in Miami, Florida. Getty Images

About 1 million to 4 million people may have filed for unemployment benefits last week, the largest number ever in such a short time. The filings figure, which will be released Thursday before U.S. markets open, will be the first indication of how hard the labor force is being hit by the abrupt shutdown of a large part of the U.S. economy by the coronavirus pandemic.

"It's the tip of the iceberg, and they're going to be ugly. It depends on the speed at which the claims were filed, and the next week will probably be worse," said Diane Swonk, chief economist at Grant Thornton. Swonk expects 1 million to 2 million claims were filed in the week that ended Saturday, a sharp jump from the slightly elevated 281,000 filed the previous week. California Gov. Gavin Newsom said Wednesday afternoon that 1 million people have already filed claims in his state since March 13. California was the first state to order residents to shelter in place. "It will be closely watched as a measure of how violent the shutdowns have been to the labor market," said Jon Hill, fixed income strategist at BMO. "You have 15.8 million people working in leisure and hospitality, and you just shut down the industry."

'Terrifying'

The speed at which the economy shut down is unprecedented, and economists usually look to a slow build in weekly unemployment claims as an early warning signal of an economic slowdown. But this sudden, unprecedented spike whether its 2 million, as expected by Barclays, or Citigroup's 4 million projection, is signaling that the unemployment rate will also leap from February's half-century low 3.5% to estimates that go as high as 10%. "There's nothing to compare this to. It's why we need extensions and shoring up of unemployment insurance and expanding it to a wider group of people," Swonk said. "This will be the first shock and awe. ... It's terrifying, but it's why nobody is going to tell Congress they did too much." Congress is in the process of adopting a $2 trillion stimulus package. "This shouldn't be an economic figure that sends the stock market plummeting. Most economists have already written off the second quarter as 'Great Depression' style economic growth," said Chris Rupkey, chief financial economist at MUFG Union Bank. He said it wouldn't be surprising to see unemployment spike temporarily to 10 million, given that the restaurant industry has said it could lose 5 million to 7 million jobs. "Whether the job losses go to 3 million unemployment claims this week, 4, 5 or 6 million in coming weeks, its pretty much besides the point there," he said. "Probably the most immediate figure that matter is the daily count of coronavirus cases. That's probably more important." Economists now expect that the economy has entered a recession and the trough will be in the second quarter, with many forecasts of a record double-digit decline in GDP. The economy is expected to be less impacted or in recovery in the third quarter, and then rebound in the fourth quarter.

When will the jobs return?