US unemployment jumps after businesses shut down due to coronavirus
Nearly 10 million Americans applied for unemployment benefits in the last two weeks of March.
A record streak in US jobs growth ended suddenly in March as employers cut 701,000 jobs because of the coronavirus outbreak that has all but shut down the US economy.
The unemployment rate jumped to 4.4% from a 50-year low of 3.5%.
Last month’s actual job losses were probably even larger because the government surveyed employers before the heaviest lay-offs hit in the past two week.
Nearly 10 million Americans applied for unemployment benefits in the last two weeks of March, far exceeding the figure for any corresponding period on record.
Virus-induced shutdowns have forced widespread lay-offs throughout the economy, from hotels, restaurants and cinemas to car factories, department stores and administrative offices.
During its nearly decade-long hiring streak, the US economy added 22.8 million jobs. Economists expect the April jobs report being released in early May to show that all those jobs will have been lost.
As recently as February, employers had added 273,000 jobs.
Some economists have now forecast that the unemployment rate could go as high as 15% within the next month. That rate would be the worst since the 1930s. During the Great Recession, unemployment peaked at 10%.
More than 90% of the US population is now living under some version of a shutdown order, which has forced the closure of bars, restaurants, cinemas, factories, gyms and most other businesses.
Some hotels are closed while others are largely empty. Fast-food chains are either closed or providing only drive-through service, costing thousands of jobs.
With business activity tightly restricted, analysts expect a stomach-churning recession.
Economists at Goldman Sachs have forecast that the economy will shrink at an annual rate of 34% in the April-June quarter — the worse fall on records dating to the Second World War.
Goldman expects the economy to rebound with 19% growth in the third quarter but even by the end of next year, the economy will not have fully recovered from the damage, Goldman projects.
Robert Kaplan, president of the Federal Reserve Bank of Dallas, said that he expects the unemployment rate to rise to the mid-teens soon, before falling to about 8% by the end of the year.
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