New US Unemployment Claims Shatter Records

New US Unemployment Claims Shatter Records

almost 4 years ago2 mins

Hard worker? Fast learner? Team player? Join the club: even more Americans newly filed for unemployment last week according to data out on Thursday, while the Federal Reserve (the Fed) announced even more economic support 🇺🇸

What does this mean?

Economists, in hindsight, were too optimistic: they predicted 5.25 million new people would file for unemployment benefits last week compared to the 6.6 million who actually did. The number of unemployed has risen rapidly ever since the coronavirus pandemic struck American shores: it jumped from almost 300,000 – a two-and-a-half-year high at the time – to a then-historic 3 million and last week to a record-shattering near-7 million.

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Why should I care?

Jobless claims reports are different from typical economic data in that they give a picture of the here and now rather than the been and gone 📆 Economists, then, have been able to use them to estimate the current rate of unemployment at around 13-14%, with some 17 million people losing their jobs since the pandemic-induced shutdown began. That’s likely to rise to at least 15% (or 20 million jobs lost) by the end of this month – a level of unemployment not seen since the Great Depression. And since economic growth tends to reflect unemployment data, the US economy as a whole is expected to shrink by 12-15%.

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Half of the Fed’s “dual mandate” is to ensure maximum employment, so it probably saw Thursday’s data as a vindication of its own decision to announce $2.3 trillion of new loans 💰 They’ll be targeted at almost every corner of the US economy, including small and medium-sized businesses, states and municipalities, and – through an increase in bond-buying (including some “risky” ones) – major corporations. The Fed’s support will come with conditions, though – like keeping workers employed wherever possible.

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