The economic fallout from COVID-19 is mounting sharply. Last week, unemployment claims in the United States hit a record 6.6 million, up from 3.3 million the previous week, and the U.S. Labor Department released its worst jobs report in 11 years. In the month of March, 701,000 people lost their jobs, sending the country’s unemployment rate to 4.4%, up from 3.5% in February, which the Wall Street Journal says is “the largest one-month increase in the rate since January 1975.”
“It was a month unlike anything American business has experienced,” the newspaper reported on March 31, noting that the 500 biggest public companies in the U.S. “were worth US$3 trillion less at the end of the month than they were at the beginning.”
A US$2 trillion relief plan signed into law on March 27 – the largest in U.S. history – will help the country battle back from the brink. The package includes direct payments and expanded unemployment benefits as well as loans and grants to businesses. But will it be enough? Probably not.
A preliminary forecast from the Congressional Budget Office warns that the U.S. unemployment rate in the second quarter will surpass 10% (the last time it breached that level was in late 1982, when it hit 10.8%, according to the WSJ) and GDP will drop by more than 7%.
“If that happened, the decline in the annualized growth rate reported by the Bureau of Economic Analysis would be about four times larger and would exceed 28%,” the CBO stated on its website, cautioning that “those declines could be much larger, however.” (The non-partisan CBO produces independent analyses of budgetary and economic issues to support the Congressional budget process.)
For the rest of this article: https://www.northernminer.com/editorial/editorial-sinking-in-a-sea-of-red/1003815661/