US Unemployment Claims Hit 26 Million amid Virus

US Unemployment Claims Hit 26 Million amid Virus

Job losses from the coronavirus pandemic in the United States climbed to 26.4 million, about one in six American workers have lost their jobs in past five weeks, the worst string of layoffs on record.

Sobering data released by the Labor Department showed 4.4 million US workers filed new claims for jobless benefits in the week that ended April 18, underscoring the damage done to the world’s largest economy by the crisis.

The figure represents a drop from recent weeks, but the weekly totals are many times higher than any recorded during the global financial crisis starting in 2008, as virus lockdown measures force businesses to close nationwide.

Economists have warned that the world is facing the sharpest slowdown since the Great Depression in the 1930s. In the US, the economy is expected to contract 5.9% this year, according to the International Monetary Fund. In just five weeks, the surge in unemployment claims has exceeded the number of jobs created in the near-decade of expansion that ended in February.

Graphic Source: BBC

The insured unemployment rate, which compares those current receiving benefits to the size of the labor force, rose to 11% — a jump of 2.8% from the previous week. That translates to “a barely believable” 23% when the Labor Department releases its unemployment rate calculation in two weeks, according to Paul Ashworth, chief U.S. economist at Capital Economics. The previous high for the U.S. was 24.9% during the Great Depression.

“We are facing an unforeseen enemy and today’s report continues to show that these are challenging times for many Americans who want to get back to work. Because of President Trump’s leadership and the American people’s commitment to slow the spread, we are on a data-driven, responsible path to opening up America again,” White House spokesman Judd Deere said. “As we begin the phased approach, the Administration continues to move quickly to provide the benefits under the CARES Act that workers, families, and small businesses across the country need.”

A man organizes food to be delivered in the financial district, during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S. April 23, 2020. Image Source: REUTERS

The government has rolled out rescue programs to help those laid off and the companies forced to cut payrolls due to social distancing restrictions and a collapse in demand. Claims numbers could remain elevated as the additional amounts provided in unemployment compensation raise some workers’ salaries above what they were making before the furloughs. Companies also could struggle to hire back if demand doesn’t resume once the economy is restarted.

The US government has responded to the crisis with more than $2 trillion in relief, expanding eligibility for unemployment benefits and increased the payments, among other measures. A record 16 million Americans received the benefits in the week ended 11 April, the Labor Department said. But many people have had trouble getting through to state offices processing the applications.

A $349 billion relief programme for small businesses, part of the $2 trillion rescue legislation, ran out of funds within two weeks. While Congress is expected to approve an additional $310 billion this week, the programme, which offers low-cost loans that do not need to be repaid if the recipient meets certain conditions, has been attacked for not reaching the smallest firms.

US COVID-19 cases as of April 23, 2020. Graphic Source: Reuters

At least 875,155 cases of the highly contagious novel coronavirus have been reported in the United States and its territories, according to a Reuters tally of state and local government sources. The U.S. diagnosed its first COVID-19 case in Washington state on Jan. 20.

At least 49,694 have died of the illness across the United States, with the largest numbers so far in New York state.

Tags : businessCOVID-19EconomyGlobal PandemicJoblesslockdownunemploymentUS

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