Almost 3.3 million Americans claimed unemployment benefits last week – more than four times the previous record set in 1982 – as part of a widespread economic downturn caused by the coronavirus.
The surge in weekly apps surprisingly reflected the damage the viral epidemic is doing to the economy.
Layoffs will also accelerate as the US economy plunges into a recession. Revenues have plummeted in restaurants, hotels, cinemas, gymnasiums and airlines.
Auto sales are falling, and automakers have factories nearby, as most employers face loan payments and other fixed costs, so they cut jobs to save money.
As job losses increase, some economists say the country’s unemployment rate could approach 13% by May.
By comparison, the highest unemployment rate in the Great Recession, which ended in 2009, was 10%.
The economic deterioration was rapid. As recently as February, the unemployment rate was at its lowest level in 50 years, at 3.5%. And the economy was growing steadily, albeit modestly.
However, by the April to June quarter of the year, some economists believe that the economy will contract at its fastest annual rate ever recorded – a contraction that could reach 30%.
In its report on Thursday, the Labor Ministry said that 3,283 million people had applied for unemployment benefits last week, up from 282,000 the previous week.
Yet many people who have lost their jobs in recent weeks have been unable to apply for unemployment assistance because state websites and telephone systems have been overwhelmed by large numbers of candidates and froze.
The traffic jam suggests that the report actually underestimates the scale of the job cuts last week.
With layoffs on the rise, a significant increase in unemployment benefits for the millions of people who will lose their jobs as a result of the coronavirus epidemic was included in an economic relief bill that was nearing approval. final to Congress.
A provision in the bill would provide an additional US $ 600 (AUD $ 992) per week in addition to unemployment assistance provided by the states. Another would extend an additional 13 weeks of benefits beyond the six months of unemployment assistance that most states offer.
The new legislation would also extend unemployment benefits, for the first time, to concert workers and other people who are not on the company’s payroll.
Separate legislation passed last week provides up to US $ 1 billion (AU $ 1.6 billion) to states to improve their ability to process claims. But this money will take time to be disbursed.
Meanwhile, Wall Street gained more ground as the record number of weekly jobless claims fell short of investors’ worst fears while strengthening the case for further stimulus to tackle the economic impact of the coronavirus pandemic.
The S&P 500 is now on track for its third consecutive session of gains, the longest duration of the index since February 12, but has only recovered a fraction of the nearly $ 8 trillion in lost value since a record high last month, the pandemic has shown no signs. peak.
Traders expect wilder swings as fears of a deep and lasting global recession and corporate flaws rage amid a disruption in trading activity.
“This is the start of the really bad numbers we’re going to see for the foreseeable month,” said Subadra Rajappa, head of US rate strategy at Societe Generale in New York.
The CBOE volatility index fell 4.4 points at the start of the session on Thursday, but was still close to levels much higher than in 2018 and 2019.
United Airlines, Delta and American Airlines increased 5.4% to 8%, while Boeing increased 7%, with the US Senate aid bill including a $ 58 billion provision for the aerospace industry.
At 10:00 am local time, the Dow Jones Industrial Average rose 631.29 points, or 2.98%, to 21,831.84, and the S&P 500 rose 75.07 points, or 3.03%, at 2,550.63. The Nasdaq Composite rose 194.36 points, or 2.63%, to 7,578.66.
The top 11 S&P sectors traded higher, gaining 2.9% in tech stocks, which gave the strongest boost.
The advanced problems outnumbered the declines by almost 5 to 1 on the NYSE and 4 to 1 on the Nasdaq.
The S&P index recorded no new high or low over 52 weeks, while the Nasdaq recorded a new high and six new lows.