US unemployment claims rocketed to a record high of 3.3 million last week as a result of the widespread economic shutdown caused by coronavirus.
The figure follows the imposition of tough restrictions aimed at curbing the COVID-19 pandemic, that led to a wave of redundancies and signalled the end to the longest employment boom in US history.
The Labor Department said 3.3 million people applied for unemployment benefits last week, up from 282,000 during the previous week.
However, Wall Street gained on the release of the latest data as it fuelled the case for more federal help to deal with the coronavirus crisis.
It came as the US Senate backed a massive $2trn stimulus package to help devastated businesses and millions of Americans whose livelihoods have been decimated by the health crisis.
The surge in weekly jobless applications – more than fives times the previous record set in 1982 – reflects the damage the outbreak is doing to the economy, with the scale of lay-offs threatening to speed up the slide into recession.
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Revenues have collapsed at restaurants, hotels, cinemas, gyms, and airlines, while car sales have also plummeted, leading manufacturers to shut factories.
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As job losses mount, some economists believe the unemployment rate could hit 13% by May – the highest level since the 1930s and the Great Depression.
The highest jobless rate in the wake of the financial crash in 2009 was 10%.
“What seemed impossible just two weeks ago is now reality,” said Nancy Vanden Houten, an economist at the consulting firm Oxford Economics.
“The US economy will experience the largest economic contraction on record with the most severe surge in unemployment ever.”
Only in February, the unemployment rate was at a 50-year low of 3.5% and the economy was continuing to grow.
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There are also indications that the level of claims for unemployment benefit, underestimate the scale of job cuts seen.
Many people made redundant have in recent weeks have been unable to apply for assistance because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up.
Workers who are not on company payrolls, such as the self-employed, are also not currently eligible for unemployment benefits even though in many cases they are no longer able to earn money.
SOURCE : https://news.sky.com/story/coronavirus-us-jobless-claims-soar-to-record-3-3-million-over-economic-shutdown-11964014