Coronavirus: More than 5m Americans made new jobless claims last week
The number of Americans making new jobless claims topped 5.2m last week, official figures have shown, as the coronavirus crisis crashes the economy and sends unemployment skyrocketing.
The figure compares to 6.6m new claims last week. It takes the number of people who have made new jobless claims in the last month to an astounding 22m.
As unemployment surges, almost all of the jobs created since the financial crisis have been wiped out.
The shocking jobs report came just a day after dire data which showed retail sales fell at their fastest rate on record in March. Data also showed that manufacturing output plunged at the quickest pace since 1946 last month.
The world’s biggest economy is set to shrink dramatically in 2020 as coronavirus lockdown measures send demand and supply crashing. The International Monetary Fund (IMF) thinks the US economy will shrink six per cent in 2020.
The formerly booming labour market has been the most obvious signal of the huge strain so far.
Job losses could hit 24m in April
Unlike European countries such as the UK, the US lacks a job retention scheme that promises to pay workers’ wages.
Instead, it has increased its social safety net, made payments directly to Americans and handed businesses loans.
The 5.2m jobless claims number was unthinkable before the coronavirus crisis began. But it was in fact below what many analysts were anticipating.
New jobless claims topped 6.6m for the previous two weeks and 3.3m the week before that.
The surge in jobless claims is a sign that unemployment could top 14 per cent, said Gregory Daco, senior US economist at Oxford Economics.
“The fact that 22 million individuals have filed for unemployment benefits in just four weeks shows that the labor market has entered a traumatic period,” he said. “We anticipate a job loss of 24m in April.”
Seema Shah, chief strategist at Principal Global Economist, pointed out that many workers were not included in the statistics. These include those in the gig economy of insecure work.
She said that therefore “labour market pains may be even worse than these numbers suggest”.
Rise in jobless claims has slowed
However, some were determined to see the upside in the fact that new jobless claims were lower than last week.
“It’s worth noting they represent a slight improvement on the previous numbers,” said Robert Alster, head of investment services at Close Brothers Asset Management.
“The question on the lips of both policymakers and those who’ve lost their jobs is how long will it take for companies to start hiring again once the country ‘reopens’ for business.”
A debate is currently raging in the US about when to reopen the economy.
President Donald Trump has tied the success of the economy to his reelection campaign. He is pushing for lockdowns to be lifted soon, putting him at odds with much of the scientific community.