WASHINGTON (AP) — Nearly 3.3 million Americans applied for unemployment benefits last week amid a widespread economic shutdown caused by the coronavirus.
The surge in weekly applications was a stunning reflection of the damage the viral outbreak is inflicting on the economy. Filings for unemployment aid generally reflect the pace of layoffs.
Layoffs are sure to accelerate as the United States (US) economy sinks into a recession. Revenue has collapsed at restaurants, hotels, movie theatres, gyms and airlines. Auto sales are plummeting, and car makers have closed 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 said 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.
“What seemed impossible just two weeks ago is now reality,” said Nancy Vanden Houten, an economist at Oxford Economics, a consulting firm. “The US economy will experience the largest economic contraction on record with the most severe surge in unemployment ever.”
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.
In its report on Thursday, the Labor Department said 3.283 million people applied for unemployment benefits last week, up from 282,000 during the previous week. Many people who have lost jobs in recent weeks, though, 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 actually understates the magnitude of job cuts last week. So does the fact that workers who are not on company payrolls aren’t currently eligible for unemployment benefits even though in many cases they’re no longer able to earn money.