TwitterFacebookPinterestGoogle+

U.S. jobless claims soared to record 3.2M last week as COVID-19 crisis took hold


Nearly 3.3 million Americans applied for unemployment benefits last week — more than quadruple the previous record set in 1982 — amid a widespread economic shutdown caused by the coronavirus pandemic.

The surge in weekly applications was a stunning reflection of the damage the viral outbreak is doing to the economy. Filings for unemployment aid generally reflect the pace of layoffs. 

The pace of layoffs is sure to accelerate as the U.S. economy sinks into a recession. Revenue has collapsed at restaurants, hotels, movie theatres, gyms, and airlines. Auto sales are plummeting, and car makers have close factories. Most such employers face loan payments and other fixed costs, so they’re cutting jobs to save money.

As job losses mount, some economists say the nation’s unemployment rate could approach 13 per cent by May. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10 per cent

The economic deterioration has been swift. As recently as February, the unemployment rate was at a 50-year low of 3.5 per cent. And the economy was growing steadily if modestly. Yet by the April-June quarter of the year, some economists think the economy will shrink at its steepest annual pace ever — a contraction that could reach 30 per cent.

More claims likely

Many people who have lost jobs in recent days have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up. That logjam suggests that Thursday’s report on filings for unemployment benefits actually understates the magnitude of job cuts last week.

With layoffs surging, a significant expansion of unemployment benefits for the millions who will lose jobs as a result of the coronavirus outbreak was included in an economic relief bill nearing final approval in Congress. One provision in the bill would provide an extra $600 US a week on top of the unemployment aid that states provide. Another would extend 13 additional weeks of benefits beyond the six months of jobless aid that most states offer.

Separate legislation passed last week provides up to $1 billion US to states to enhance their ability to process claims. But that money will take time to be disbursed.





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.