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US reveals record weekly unemployment figures amid ‘looming recession’

Published: (Updated: ) in Australian News by .

Almost 3.3 million Americans applied for unemployment benefits last week — more than quadruple the previous record set in 1982 — amid a widespread economic shutdown caused by the coronavirus.

Almost 3.3 million Americans applied for unemployment benefits last week — more than quadruple the previous record set in 1982 — amid a widespread economic shutdown caused by the coronavirus.

The surge in weekly applications was a stunning reflection of the damage the viral outbreak is inflicting on the economy.

Layoffs are also sure to accelerate as the US economy sinks into a recession. Revenue has collapsed at restaurants, hotels, movie theaters, gyms, and airlines.

Auto sales are plummeting, and car makers have close factories as most employers face loan payments and other fixed costs, so they're cutting jobs to save money.

As job losses mount, some economists say the nation's unemployment rate could approach 13 per cent by May.

By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10 per cent.

The economic deterioration has been swift. As recently as February, the unemployment rate was at a 50-year low of 3.5 per cent. 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 per cent.

In its report Thursday, 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.

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That jam suggests that the report actually understates the magnitude of job cuts last week.

With layoffs surging, a significant expansion of unemployment benefits for the millions who will lose jobs as a result of the coronavirus outbreak was included in an economic relief bill nearing final approval in Congress.

One provision in the bill would provide an extra US$600 (AUD$992) 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.

The new legislation would also extend unemployment benefits, for the first time, to gig workers and others who are not on company payrolls.

Separate legislation passed last week provides up to US$1 billion (AUD$1.6bn) to states to enhance their ability to process claims. But that money will take time to be disbursed.

Wall Street still rising

Meanwhile, Wall Street has gained more ground as the record weekly jobless claims came in below investors' worst fears while adding to the case for more stimulus to combat the economic impact of the coronavirus pandemic.

The S&P 500 is now on pace for its third straight session of gains, the index's longest run since February 12, but has only recouped a fraction of the nearly $US8 trillion in value lost since a record high last month as the pandemic showed no signs of peaking.

Traders expect more wild swings as fears of a deep and lasting global recession and corporate defaults rage amid a breakdown in business activity.

"This is the beginning of the really bad numbers we're going to see for the foreseeable month," said Subadra Rajappa, head of US rates strategy at Societe Generale in New York.

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The CBOE volatility index fell 4.4 points in early trading on Thursday, but was still near levels far above those in 2018 and 2019.

United Airlines, Delta and American Airlines rose between 5.4 per cent and eight per cent, while Boeing rose seven per cent as the US Senate aid bill included a $US58 billion provision for the aerospace industry.

At 10am local time, the Dow Jones Industrial Average was up 631.29 points, or 2.98 per cent, at 21,831.84, and the S&P 500 was up 75.07 points, or 3.03 per cent, at 2550.63. The Nasdaq Composite was up 194.36 points, or 2.63 per cent, at 7578.66.

All 11 major S&P sectors were trading higher, with a 2.9 per cent gain in technology stocks providing the biggest boost.

Advancing issues outnumbered decliners nearly 5-to-1 on the NYSE and 4-to-1 on the Nasdaq.

The S&P index recorded no new 52-week high or low, while the Nasdaq logged one new high and six new lows.

Source: 9News

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