Thursday 26 March 2020 1:05 pm

US unemployment skyrockets as coronavirus crashes economy

The number of Americans claiming unemployment benefits skyrocketed at the fastest pace on record last week as coronavirus laid waste to the US economy, data showed today.

Jobless claims soared to 3.3 million in the week to 21 March from 282,000 a week earlier, according to the US Department of Labor (DoL).

Read more: Trump and Congress reach deal on $2 trillion coronavirus stimulus

“This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series,” the Department of Labor said.

“During the week ending 21 march, the increase in initial claims are due to the impacts of the Covid-19 virus,” the DoL said.

“Nearly every state providing comments cited the COVID-19 virus impacts. States continued to cite services industries broadly, particularly accommodation and food services.”

The unprecedented rise in jobless claims came despite the US Federal Reserve pumping trillions of dollars into the banking system, slashing interest rates to zero and lending an enormous amount of money to businesses.

However, the figures were recorded before Congress signed off on a $2 trillion stimulus package that seeks to help businesses and workers as coronavirus ravages the economy.

Yet it is unlikely that even the biggest government stimulus package in history can stop unemployment from soaring to record highs and the US entering a deep recession.

Read more: US Federal Reserve announces unlimited bond-buying to tackle coronavirus slowdown

Commerzbank economist Christoph Bolz said: “The lockdown of the economy is likely to cost more jobs in the coming weeks. We fear that the US unemployment rate will reach a post-war record by mid-year.”

Bolz predicted the US unemployment rate could rise from 3.5 per cent to 11.5 per cent, putting roughly 19m Americans out of a job. That would be higher than the previous post-war record of 10.8 per cent at the end of 1982.