Due to the worsening of the corona crisis in the USA, initial applications for unemployment benefits have again risen dramatically.
Their number has increased in the week to 28. March roughly doubled from 3.3 million to now 6.65 million, according to the U.S. Department of labor. The number of initial claims the previous week was already the highest since the data began being collected, but now there is another record.
Initial claims are considered an indicator of near-term labor market trends in the world’s largest economy. Meanwhile, they point to a dramatic economic collapse as a result of the corona crisis. Until a few weeks ago, the number of first-time applications had regularly been below 100.000 per week.
The rapid spread of the novel coronavirus sars-cov-2 has brought public life to a standstill in much of the u.S. Around three quarters of the approximately 330 million americans are now subject to exit restrictions imposed by states. Many businesses are closed, restaurants and hotels remain empty, countless trips have been cancelled.
Many employees of closed companies must therefore apply for unemployment benefits. Layoffs are generally much quicker in the USA than in germany, for example. In the U.S., there has been no regulation such as the short-time allowance to stabilize the crisis situation.
With a stimulus package that the u.S. Congress plans to use to pump about $2 billion into the economy, the previously very limited unemployment assistance was expanded last week. Employers will now be able to furlough employees for up to four months instead of firing them. During this time, the state was responsible for the salary of the employees. However, the new regulation had hardly any effect on the youngest initial applications up to last friday.
The full impact of the economic turmoil caused by the coronavirus pandemic is still unknown. But many analysts now fear a dramatic slump in the second quarter and a recession for the whole year as a whole.
The unemployment rate in february – before the rapid spread of the sars-cov-2 virus in the u.S. – was a low 3.5 percent. This was the lowest level in decades. March figures are due to be released on friday. However, due to a delay in data collection, analysts expect that the figures will not yet reflect the recent dramatic increase.
Until the beginning of february, the u.S. Economy was still humming along, the stock market was reporting highs and experts were expecting economic growth of around two percent. President donald trump, who is seeking re-election in november, boasted of his successful economic policy. But the rapid spread of the coronavirus since the beginning of march has put an end to the good economic prospects. Trump, meanwhile, promises the economy will take off again "like a rocket" once the epidemic is over.
In the u.S., according to researchers at the university of johns hopkins, as of thursday morning (local time), there had been about 220.000 confirmed infections with the novel coronavirus. More than 5,000 people have died as a result of covid-19, a disease caused by the virus.
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