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More than 3.8 million Americans filed for unemployment benefits last week, bringing the six-week total of new jobless claims to 30.3 million, the worst employment crisis since the Great Depression.
The news wasn’t all bad. While the number was slightly higher than the 3.5 million economists surveyed by Dow Jones expected, the number was far lower than the record 6.8 million for the week of March 28. The latest number was also lower than the previous week, which came in at 4.4 million. Still, one in six American workers is now unemployed.
Continuing claims – the number of people currently receiving unemployment benefits – rose to nearly 18 million, up 2.2 million from the previous week, according to Labor Department figures Thursday.
“With more employers cutting payrolls to save money, economists have forecast that the unemployment rate for April could go as high as 20%. That would be the highest rate since it reached 25% during the Great Depression,” The Associated Press reported.
The numbers could actually be far worse. “The Economic Policy Institute earlier this week estimated that the current claims level probably undercounts by as much as 12 million those who are eligible for benefits but not getting them due to the inability to file or other roadblocks,” CNBC reported.
On Wednesday, Federal Reserve Chairman Jerome Powell said the unemployment rate will likely to rise above 10% from the March level of 4.4%.
The jobless news came a day after the Commerce Department announced the U.S. economy shrank at a 4.8% annual rate in the first quarter as the coronavirus pandemic prompted states to shut down businesses.
After the longest economic expansion in history under President Trump, the gross domestic product (GDP) posted a quarterly drop for the first time in six years, the Commerce Department said Wednesday. The GDP measures the total output of goods and services in the economy.
The 4.8% drop was the highest since the economy shrank at an 8.4% annual rate in the fourth quarter of 2008, during the Great Recession.
“Forecasters say the drop in the January-March quarter will be only a precursor of a far grimmer GDP report to come on the current April-June period, with business shutdowns and layoffs striking with devastating force. The Congressional Budget Office has estimated that GDP will plunge this quarter at a 40% annual rate,” The Associated Press reported.
James Bullard, president of the St. Louis Fed, said in an interview last week with Bloomberg TV that things may be even worse.
“If you read the blog carefully, you’ll see that there is a way to bound the unemployment rate – it’s going to be somewhere between 10 percent and, I think, the upper bound is around 42 percent,” he said.
Fed economist Miguel Faria-e-Castro added: “Summing to the initial number of unemployed in February, this resulted in a total number of unemployed persons of 52.81 million. Given the assumption of a constant labor force, this resulted in an unemployment rate of 32.1 percent.”
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