US unemployment crisis: 3.8m more claim aid as total layoffs soar beyond 30m

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A further 3.84 million people in the US have applied for unemployment aid (Image: GETTY)

The Labor Department’s weekly jobless claims report has revealed initial claims for state unemployment benefits totaled 3.839 million for the week ended April 25. This is down from 4.442 million in the prior week but the total has now soared beyond 3o million in just five weeks. Reuters had polled economists who had forecast 3.50 million claims in the latest week. 

Applications for jobless benefits hit a record high of 6.867 million in the week ended March 28 – shortly after US President Donald Trump enforced a nationwide lockdown.

Andrew Hollenhorst, an economist at Citigroup in New York, said: “Job separations will likely remain high for a while, as softer demand spills over into industries not initially directly affected by shutdowns.”

The US government has enabled people temporarily unemployed for reasons related to COVID-19 to file for jobless benefits.

This includes those quarantined with the expectation of returning to work, as well as people leaving employment due to a risk of exposure or infection or to care for a family member.

On Thursday, the US sparked fresh disastrous recession fears after the Commerce Department’s latest report showed the world’s largest economy slumped 4.8 percent in the first quarter of this year.

The fall in GDP marked the first economic contraction in the US in six years, with economic forecasts warning of far worse to come in the April to June period, as the true impact on consumers and businesses from the current lockdown become evident.

The Congressional Budget Office has even estimated that GDP will plunge by a massive 40 percent year-on-year in this quarter,.

This would be the bleakest three-month period since such records were first compiled in 1947.

Consumer spending, which accounts for more than two-thirds US economic activity,m plunged 7.6 percent in the first three months of this year – the biggest drop since the secind quarter of 1980.

Income at the disposal of households grew by just half-a-percentage point, compared to 12.6 percent in the final three months of 2019.

Imports collapsed by 15.3 percent – the sharpest fall since the second quarter of 2009.

The US Congress has already approved a huge financial package of $ 3trillion, while the Federal Reserve has cut interest rates to near zero.

Economic analysts have warned of much worse to come for the US economy in the current quarter, that could trigger a “deep recession”.

Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles, said: “The economy is in free fall, we could be approaching something much worse than a deep recession.

“It’s premature to talk about a recovery at this moment, we are going to be seeing a lot of bankruptcies for small and medium sized businesses.”

Chris Rupkey, chief economist at MUFG in New York, said: “The economy will continue to fall until the country opens back up.

“If the economy fell this hard in the first quarter, with less than a month of pandemic lockdown for most states, don’t ask how far it will crater in the second quarter.”

The US has by far the most infections and deaths from the killer coronavirus outbreak.

The country has so far announced more than one million confirmed cases, with almost 62,000 deaths.

On Wednesday, the US announced a further 2,390 deaths and 28,429 cases.


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