A further 3.2 million Americans sought unemployment benefits last week as the economic toll from the coronavirus pandemic continued to mount.
The new applications brought the total number of jobless claims since mid-March to 33.3 million- or about 20% of the US workforce.
The number of new claims reported each week by the Department of Labor has subsided since hitting a peak of 6.9 million in March.
But they remain extraordinarily high.
And the number of people collecting benefits has continued to rise, despite recent moves to start re-opening in some parts of the country.
“The significant rise in continuing claims … is a little disappointing since it suggests few people are being recalled to work,” said Paul Ashworth, chief US economist at Capital Economics.
Companies such as Uber, Lyft and Airbnb are amongst the firms that have announced cuts in recent weeks, as shutdowns halted significant amounts of travel.
The impact has been felt across the economy, affecting medical practices, restaurants and administrative workers among many others.
Economists say the monthly unemployment rate for April, which will be released on Friday, is likely to reach 15% or higher.
Just two months ago, the unemployment rate was at 3.5%, a 50-year low.
Since the coronavirus has taken hold in the US, the country has suffered its worst growth numbers in a decade, the worst retail sales report on record and declines in business activity not seen since the 2008 financial crisis.
Meanwhile, weeks of elevated unemployment claims have far surpassed the prior record of 700,000.
Food pantries have seen spikes in demand, and homeowners and renters have delayed monthly payments.
The National Multifamily Housing Council – an industry group for apartment owners – reported last month that nearly a third of renters did not make their full payment by the first of the month.
“If nothing else changes and evictions continue as normal, this public health crisis will turn into a full blown homelessness crisis,” said Matthew Desmond, a sociology professor at Princeton University who runs the Eviction Lab project.
Economists are hoping the pain will ease as businesses gradually restart.
Retailers such as Gap have already announced plans for re-opening some stores. Others, including J Crew and department store Neiman Marcus, have been pushed into bankruptcy.
Moody’s Investors Service has predicted that the unemployment rate could fall back to 7% by the end of the year, but that forecast depends on the virus. The longer the shutdown persists, the harder it will be for the economy to rebound.
“If the US does not contain the pandemic and the economy remains shut beyond the second quarter, the unemployment rate would rise further … and many of the job losses that we currently view as temporary would likely become permanent,” the firm’s analysts said.
Source: BBC
