The coronavirus outbreak may deal another body blow to the struggling US economy.
According to a disturbing report by the US Department of Labor, the number of laid-off workers seeking unemployment benefits for the Pandemic Emergency Unemployment Compensation (PEUC) program, a program that allows people who have exhausted their unemployment benefits to receive up to 13 additional weeks of compensation, is growing exponentially.
This week, the Labor Department reported that for the Aug. 9 – Aug. 15 period, the number of new unemployed people in the US topped 1 million, an increase of 135,000 from the previous week’s level of 0.971 million — bringing (since mid-March) the total number of initial applications for unemployment benefits to roughly 54.7 million.
The latest week also marks the 21st week out of the last 22 weeks of unemployment claims above one million following the implementation of the COVID-19 lockdowns.
“We’re still at a historically high level of claims,” Scott Anderson, chief economist at Bank of the West, told The New York Times, noting that the weekly peak during the Great Recession stood at 665,000. “The labor market is in the ICU,” Anderson added.
Mass Unemployment Prediction
Experts are predicting tough times ahead. “The real tsunami is coming,” Mark Zandi, chief economist at Moody’s Analytics, told Axios. “My guess is at this point hiring in the industries that have been hit hard is going to abate.”
In March, before the pandemic, employers were having a hard time finding enough workers to keep operating at full capacity. Here we are six months later with an unemployment rate of 10.2%, down from 14.7% in April, and a total number of unemployed of 16.3 million. Just mind-boggling.
Zandi also said that the “labor market is set to start weakening again here, particularly if Congress and the administration don’t get it together and pass more support.”