WORLD US joblessness set to spike as virus takes toll on businesses

WORLD

US joblessness set to spike as virus takes toll on businesses

AFP

10:21, March 26, 2020

FFdsJKYs.jpg

File photo

With streets in major cities barren, and shops and restaurants forced to close due to the coronavirus pandemic, economists warn of a record explosion of Americans filing for unemployment benefits.

The Labor Department on Thursday will release its weekly data on first-time applications for jobless benefits covering the week ending March 21 -- the first to show the epidemic's impact on the US economy.

"Whatever the number, it will be horrific," said Ian Shepherdson of Pantheon Macroeconomics.

The data have been mundane for the past two years amid a very strong US labor market, but the situation has changed for this lowly report on the frontlines of the virus fallout.

Last week's report showed jobless claims surged to their highest level since September 2017, especially with a jump in applications from hotel and restaurant workers. 

But that was just the tip of the iceberg.

"The consensus for today's first post-apocalypse jobless claims number (1.5 million), looks much too low," Shepherdson said, adding that he is expecting a staggering 3.5 million.

White House economic adviser Larry Kudlow acknowledged the report would show a jump, but said the market is expecting it. 

"It's going to be a very large increase," he said on Fox Business Network.

But economists cautioned that forecasting data in unprecedented times is dicey at best.

The models "are based on prior experience and we have no prior experience of an economy that has largely been shut down," said Rubeela Farooqi of High Frequency Economics.

"These are extraordinary times that will result in extraordinary outcomes."

Reports from states and even data on Google searches show that unemployment offices have been overwhelmed in recent days and may have to estimate their totals.

Shepherdson noted that New York alone reported receiving 1.7 million calls last week, "though it's not clear if all of these calls led to a formal claim."

Economists are projecting the pandemic's shutdown could lead to a staggering 14 percent contraction of the US economy, and the Conference Board on Wednesday said unemployment could rise to as high as 15 percent later in the year -- far beyond the 10 percent peak hit in October 2009 during the global financial crisis.

Congress is pushing through a massive $2 trillion rescue package to dampen the blow to the economy, which includes a huge expansion in unemployment insurance, boosting the weekly payment by $600 and extending the benefits to workers who would not normally qualify.


Related Stories

Terms of Service & Privacy Policy

We have updated our privacy policy to comply with the latest laws and regulations. The updated policy explains the mechanism of how we collect and treat your personal data. You can learn more about the rights you have by reading our terms of service. Please read them carefully. By clicking AGREE, you indicate that you have read and agreed to our privacy policies

Agree and continue