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US jobless claims hit record high of 3.28 mln as covid-19 crisis deepens

The labor market is feeling the pinch of the widespread disruptions caused by the covid-19 outbreak. Jobless claims, which is the number of workers filing for unemployment benefits, increased sharply in the week ended March 21 as several workers went out of job due to the shutdowns.

Data released by the Labor Department is reflective of the huge impact the ongoing crisis could have on the economy. It has added to fears that the country is headed into a severe recession, probably more quickly than initially estimated. There are concerns that unemployment rate, which had dropped to a record low early this year, would spike in the coming months.

Labor Economist Heidi Shierholz asked everyone to Brace for Impact in her tweetstorm minutes after the data was released by the US Labor Department and remakred, “Congress is currently debating a $2 trillion #stimulusbill to help this country through this unprecedented crisis. It will be an important step in our response, but we will need more and better.”

Initial jobless claims, on a seasonally adjusted basis, surged by more than 3 million sequentially to about 3,283,000 in the most recent week, which is the highest ever recorded. The previous week’s number was revised up to 232,500. Unable to pay wages, several businesses have resorted to lay-off.

Pennsylvania was the worst-affected state, with 378,900 persons filing for jobless claims in seven days, followed by Ohio and California.

Morgan Housel, author of “The Psychology of Money: Timeless lessons on wealth, greed, and happiness”

Considering the gravity of the situation and its implications, the near-term outlook for the labor market is very bleak. According to reports, efforts are on to give priority to the the claims of people who have been laid off.

Vishnu Beri, CEO of AlphaStreet said, “These are unprecedented times and I expect the job market turmoil to continue for at least a few months. The recovery speed will be dependent on the correlation of the industry behavior and the assumptions in the $2 trillion stimulus.”

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