The number of Americans seeking unemployment benefits has doubled in a week to 6.6 million, setting a new record amid the coronavirus pandemic.
The impact of COVID-19’s spread has come into stark relief in the past fortnight, as economies across the globe sink toward severe recessions and businesses shut down.
In the US, which now has a nearly a quarter of the world’s coronavirus cases, last week’s figure is much higher than the previous record of 3.3 million – which was reported in the previous week.
And the jobless claims are expected to keep rising as most Americans are under some form of lockdown so cannot get to work even if there place of employment is still operating.
As a result, economists say more stimulus is needed.
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The mounting lay-offs have led economists to contemplate the possibility of as many as 20 million lost jobs by the end of April.
The ongoing turmoil provided the backdrop to another volatile trading session on Wall Street.
Stocks surged despite the huge rise in jobless claims because oil prices jumped by one third on hopes of a deal to end a damaging price war.
The Dow Jones Industrial Average rose 2.2 per cent or 470 points to 21,413.
The S&P 500 put on 2.3 per cent or 56 points to 2,527 and the tech-heavy Nasdaq increased 1.7 per cent to 7,487.
The rises come after US President Donald Trump said he had brokered a deal between Saudi Arabia and Russia to reduce oil production by 10 to 15 million barrels of oil a day.
…..Could be as high as 15 Million Barrels. Good (GREAT) news for everyone!
— Donald J. Trump (@realDonaldTrump) April 2, 2020
Saudi Arabia had called for an emergency meeting of OPEC and non-OPEC oil producers, state news agency SPA said on Thursday (local time).
Deeper slump than previously expected
The unemployment rate in the US could spike to as high as 15 per cent in April, topping the previous record of 10.8 per cent set during a deep recession in 1982.
Goldman Sachs expects the US economy to experience a far deeper slump than previously anticipated as the pandemic hammers businesses, causing a wave of mass unemployment.
Goldman Sachs expects a wave of mass unemployment in the U.S. economy https://t.co/tAmlvnk7Hv
— Bloomberg (@business) March 31, 2020
Annual GDP growth forecasts are being revised ever lower to reflect the growing severity of economic pain the virus is causing.
Many employers are slashing their payrolls to try to stay afloat because their revenue has collapsed. This is especially true of restaurants, hotels, gyms, movie theatres and other venues that depend on face-to-face interaction.
Car sales have sunk, and factories have closed.
Stay-at-home orders, imposed by most US states, have intensified the pressure on businesses, most of still have rent, loans and other bills that must be paid.
The mammoth US unemployment claims in their historical context. pic.twitter.com/UNDwhBMpZt
— Ben Riley-Smith (@benrileysmith) April 2, 2020
The US Congress significantly expanded the unemployment benefits system in last week’s $US2.2 trillion ($A3.6 trillion) economic rescue package.
That legislation added $US600 ($A1000) a week in jobless aid, on top of what recipients receive from their states.
This will enable many lower-income workers to manage their expenses and even increase their purchasing power and support the economy.