Business & Economy

US jobless claims skyrocket to 37 mn in 2 months due to Covid-19 lockdowns

By Jorge A. Bañales

Washington, May 14 (efe-epa).- The economic toll from the lockdown measures adopted in the United States to combat the novel coronavirus continues to grow, with around 36.5 million people having filed initial claims for unemployment insurance over the past eight weeks.

Although first-time filings for jobless benefits have been trending downward since late March, initial unemployment claims still rose by a whopping 2.98 million in the week ending May 9.

The latest figures from the Labor Department, released Thursday, exceeded economists’ forecasts and come at a time when the country is sharply divided over the pace at which normal economic activity should resume, with Republicans generally calling for non-essential businesses to reopen and Democrats urging much greater caution.

Since the onset of the coronavirus crisis in the US, the Federal Reserve has dug deep into its arsenal in a bid to ease some of the economic devastation, including injecting massive liquidity into financial markets, making large-scale purchases of Treasuries and agency mortgage-backed securities and lowering its benchmark interest rate to practically zero.

The US Congress, for its part, has approved several fiscal stimulus packages valued at nearly $3 trillion and is considering an additional huge stimulus bill to assist hard-hit state and local governments.

Initial jobless claims climbed to a record high of 6.9 million in the week ending March 28 but have steadily decreased since then, with the “advance” figure for the week ending May 9 falling under 3 million for the first time since the week ending March 14 (282,000).

The four-week moving average of initial jobless claims, which smooths out week-to-week variations, came in at 3.61 million in the week ending May 9, down from 4.18 million the previous week.

The advance number for seasonally adjusted insured unemployment (also known as continued claims and reported with a one-week lag) during the week ending May 2 rose to a record 22.8 million, an increase of 456,000 from the previous week, the Labor Department said.

The insured unemployment figure is an indicator that tracks people who have already filed an initial claim and experienced at least one week of unemployment before filing a continued claim.

Only seven states saw a rise in initial jobless claims compared to the week ending May 2, with the number of those applications climbing by a non-seasonally adjusted 262,542 in Connecticut, 47,045 in Florida, 13,994 in Washington, 13,035 in Georgia, 5,265 in New York, 1,202 in South Dakota and 697 in Wisconsin.

Florida and Georgia, two states with Republican governors, experienced a rise in initial jobless claims in early May despite having partially reopened their economies in recent weeks.

But other states that have taken the lead in lifting restrictions saw big drops in first-time filings, most notably Oklahoma (down from 61,091 to 32,794, a 65 percent drop).

Last week, the Labor Department reported that the unemployment rate shot up by 10.3 percentage points in April (from March) to 14.7 percent, its highest level since the Great Depression of the 1930s and the highest month-to-month increase ever recorded.

Leisure and hospitality was the hardest-hit sector, shedding 7.7 million jobs, according to the report by the department’s Bureau of Labor Statistics.

The vast majority of the job losses in that sector occurred at food services and drinking places (-5.5 million).

Education and health services also took a beating, with employment declining by 2.5 million.

A total of 503,000 jobs were lost at dentists’ offices, while postponement of elective procedures across the country caused physicians’ offices and the offices of other health-care practitioners to shed 243,000 jobs and 205,000 jobs, respectively.

US first-quarter gross domestic product (GDP) fell 4.8 percent, according to the Labor Department’s “advance” estimate, due largely to the states’ coronavirus-triggered stay-at-home orders and closures of non-essential businesses.

Although that was the biggest GDP decline since the last quarter of 2008 (-8.4 percent), the economic contraction in the second quarter is expected to be far greater.

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