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The number of Americans applying for unemployment benefits is likely to have peaked for a second consecutive week as more and more jurisdictions apply home support measures to curb the coronavirus pandemic, which, according to economists, pushed the economy into recession.
The weekly jobless claims report released Thursday by the Department of Labor, the most recent data on the health of the economy, is expected to show that claims have surpassed the previous week’s 3.3 million record. This is likely to bolster economists’ view that the longest employment boom in US history probably ended in March.
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More than 80% of Americans are under some form of foreclosure, up from less than 50% a few weeks ago, leaving state employment agencies overwhelmed by an avalanche of applicants.
The United States has the highest number of confirmed cases of COVID-19, the respiratory disease caused by the virus, with nearly 188,000 people infected. Nearly 4,000 people in the country have died from the disease, according to a Reuters count.
“The US job market is in free fall,” said Gregory Daco, American chief economist at Oxford Economics in New York. “The prospect of tighter foreclosures and the fact that many states have not yet been able to process the full amount of jobless claims suggests that the worst is yet to come. “
Initial claims for state unemployment benefits have likely reached a seasonally adjusted level of 3.50 million for the week ended March 28, according to a Reuters survey of economists. Survey estimates reached 5.25 million.
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Reimbursement data for the week ending March 21 is expected to be revised upward, as many state employment offices have reported difficulty processing claims. Unemployment benefit claims peaked at 665,000 during the 2007-2009 recession, in which 8.7 million jobs were lost.
Economists say the country should prepare for jobless claims to continue to escalate, citing in part the generous provisions of a historic $ 2.2 trillion tax package signed by President Donald Trump last Friday and more flexible federal requirements for workers to apply for benefits.
As a result, the self-employed and concert workers who previously could not claim unemployment benefits are now eligible. In addition, the unemployed will receive up to $ 600 per week for up to four months, which equals $ 15 per hour for a 40-hour work week. In comparison, the government-imposed minimum wage is around $ 7.25 an hour, and the average payment of unemployment benefits was around $ 385 per person per month earlier this year.
“Why work when it is better not to work financially and in health? Said Sung Won Sohn, professor of business economics at Loyola Marymount University in Los Angeles.
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Bank of America Securities said based on its monitoring of state reports and its own data models, it expected claims of more than 5.50 million for the past week.
“According to our reading, 22 states expect about 2.5 million unemployment insurance claims, up from official non-seasonal figures of 1.4 million the previous week,” said Joseph Song. , American economist at Bank of America Securities in New York.
“Meanwhile, several other states have given general indications that claims will be higher in the next report. A rough back-to-envelope calculation extrapolating to all 50 states would imply nearly 5.6 million new claims. “
Claims data from last week has no bearing on the closely watched employment report for March, which is due to be released on Friday. For the latter, the government surveyed businesses and households in the middle of the month, when only a handful of states enforced “stay at home” or “shelter on the spot” orders.
However, this is an overview of the carnage that awaits you. Retailers, including Macy’s, Kohl’s Corp and Gap Inc, said Monday they will lay off tens of thousands of employees as they prepare to keep stores closed longer.
According to a Reuters survey of economists, the government report on Friday is expected to show that non-farm payrolls fell 100,000 jobs last month after a sharp increase of 273,000 in February. The unemployment rate is expected to increase by three tenths of a point to 3.8% in March.
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“A snapshot of the hardest-hit industries suggests a potential job loss of more than 16 million jobs,” said David Kelly, chief global strategist at JPMorgan Funds in New York. “The loss would be enough to drop the unemployment rate from about 3.5% to 12.5%, which would be its highest rate since the Great Depression.”
(Reporting by Lucia Mutikani; Editing by Dan Burns and Chizu Nomiyama)