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March 27, 2020

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3.3m seek jobless benefits in US

NEARLY 3.3 million Americans applied for unemployment benefits last week — nearly five times the previous record set in 1982 — amid a widespread economic shutdown caused by the novel coronavirus pandemic.

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 economy sinks into a recession. Revenue has collapsed at restaurants, hotels, movie theaters, gyms and airlines. Auto sales are plummeting, and carmakers 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 say the US unemployment rate could approach 13 percent by May. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10 percent.

“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 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 percent. 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 — a contraction that could reach 30 percent.

In its report yesterday, the Labor Department said 3.283 million people applied for unemployment benefits last week, up from 282,000 during the previous week. Yet many people who have lost jobs in recent weeks 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.

With layoffs surging, a significant expansion of unemployment benefits for the millions who will lose jobs as a result of the outbreak was included in an economic relief bill nearing final approval in Congress. One provision in the bill would provide an extra US$600 a week on top of the unemployment aid that states provide. Another would extend 13 additional weeks of benefits beyond the six months of jobless aid that most states offer.




 

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