As the United States faces a resurgence of Covid-19 cases with most states reporting record numbers, the country has been hit by rising numbers of joblessness. According to the latest figures by the Labour department, more than 1.3 million Americans applied for unemployment benefits at the beginning of July, a historically high figure.
A July 9 report from the Labor Department shows that the number of applications for unemployment has now topped 1 million for 16 straight weeks. Before the pandemic, the record high for weekly unemployment applications was fewer than 700,000.
This number points to the persistent layoffs that are continually happening due to employers’ inability to get back to business due to the coronavirus flaring up in the United States.
Six states in the United States have decided to defer any reopening plans for the time being. These include Arizona, California, Colorado, Florida, Michigan, and Texas. Fifteen other states have suspended their re-openings. This means, in effect, almost half of the US is not ready for business. According to the Bureau of Labour Statistics figures, the unemployment rate declined by 2.2 percentage points to 11.1 percent in June, and the number of unemployed persons fell by 3.2 million to 17.8 million. Although unemployment fell in May and June, the jobless rate and the number of unemployed are up by 7.6 percentage points and 12.0 million, respectively, since February.
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The number of permanent job losers has continued to rise, increasing by 588,000 to 2.9 million in June. The coronavirus pullback has stalled a tentative recovery in the job market and is likely triggering additional layoffs. The number of part-time workers is at 9.1 million at present.
The number of people who are on furloughed and receiving jobless benefits has slightly improved but is still high at 18 million. Though, it is good news that some companies are rehiring their workers through HR Managers. A new order earlier from the Federal Pandemic Unemployment Assistance program made gig workers and contract people eligible to apply for aid. That added another additional 1 million who sought benefits last week under a separate program.
The resurgence in cases has slowed the economy and the states most affected contribute one-third to the economy.
Yet, the economy has regained only about one-third of the jobs that vanished in March and April. The June report quoted above is still not reflecting the actual numbers as the number of unemployed is bound to have increased with the Covid-19 striking harder from mid-June.
The pool of workers whose previous jobs have disappeared and who must search for new ones has grown. “Their circumstances may be more challenging to rectify than those who were laid off because of temporary closure,” said Elizabeth Akers, who was a staff economist with the Council of Economic Advisers under President George W. Bush. “Finding new jobs will be more difficult. There’s been scarring in the economy.”
Alongside, consumer spending tracked by debit and credit cards spending by the Bank of America shows a decline in purchases all over. Auto and home sales have both shown a significant decline. Dining out has gone down, according to data from OpenTable, the reservations website.
“This suggests that renewed fears about the virus, rather than government restrictions, are driving the pullback in activity,” said Andrew Hunter, senior U.S. economist at Capital Economics, a forecasting firm.
The government has come up with a $3 trillion assistance program. Though there are some drawbacks in its implementation, it has benefited a large section of the unemployed who are dependent on the jobless benefit checks deposited in their accounts directly and the loans to small. business.
Lisa D. Cook, a professor of economics and international relations at Michigan State University, says that state and local governments are laying off health care and education workers and other governmental impositions like rental waivers and evictions bans are also coming to an end, though households and businesses have yet not recovered and are unable to meet expenses. “I just worry about this all piling up in the system,” she said, “and if we don’t have an eye on it right now, we can wind up with something worse than 2008.”