The coronavirus pandemic has been an economic disaster for the United States. With stay-at-home orders and travel bans, the economic disruption has been quite substantial.
Last month, a study from the University of Illinois, University of Chicago, Harvard Business School, and National Bureau of Economic Research found that the pandemic has forced 100,000 small businesses to have closed up permanently.
Drastic Measures Cause Unemployment to Spike
Another problem that the virus has had in the county has been the spike in unemployment levels. Forced closures and a lack of customers have forced multiple companies in the United States to scramble to cut costs.
Seeing no better way, most of them have had to either keep their workers or cut staff. Needless to say, most firms have chosen the latter.
Earlier today, Yahoo! Finance reported that another 2.981 million Americans filed for unemployment benefits last week. This number surpassed analysts’ estimates of 2.5 million, and it follows a week where 3.18 million people filed their claims.
36 million Americans have been rendered jobless since the wave of the pandemic began.
Continuing unemployment claims – a figure that lags the main unemployment benefits by a week – showed a total of 22.83 million claims two weeks ago. The prior week saw 22.38 claims, going by the metric
In a note, Lewis Alexander, an economist at financial services company Nomura, reportedly said:
“Initial jobless claims will likely moderate further from historic levels in the week ending 9 May. However, since mid-March, roughly 28 million initial jobless claims have been filed, highlighting the unprecedented collapse in labor market activity.”
Possibly More to Come in the Next Few Months
The problem could even get worse, as several analysts have predicted. While the real unemployment rate for May is too soon to call, the country recorded a 14.7 percent rate in April. Of course, the month saw the highest unemployment claims yet, with 20 million in total.
While new claims have declined sharply this month, Goldman Sachs analysts predict that the unemployment rate will peak at 25 percent.
Economists at the New York-based banking giant downgraded their labor market forecast yesterday. In a report, it explained it did so based on the assumption that the country will record more job losses.
The Wall Street bank had previously projected that the country’s unemployment rate would peak at 15 percent. However, given new government statistics and a glimpse of how reopening efforts could become, it explained that it had to revise its numbers.
If Goldman’s analysts are right, then the coronavirus could be perhaps the biggest unemployment trigger in American history. Unemployment levels in the Great Depression reportedly peaked at 24.9 percent.
The bank also made predictions concerning the real jobless rate, which captures the percentage of Americans who would want new jobs, but who aren’t searching. The statistic held at 22.8 percent for April, up from just 8.7 percent in March.
Like the unemployment rate, Goldman adjusted its predictions for the peak real jobless rate. On Wednesday, it moved its estimates from 29 percent to 35 percent.