US unemployment claims double to 6.6 million in a week; stocks fall

After climbing to a record high a week ago, jobless claims in the US more than doubled and reached unprecedented levels in the week ended March 28 as more and more workers are rendered jobless due to the coronavirus outbreak. The number of persons filing for unemployment benefits surged to a seasonally adjusted 6.6 million in the final week of March, marking a sharp increase from about 3.3 million recorded in the preceding week.

Jobless Rate Up

Meanwhile, the seasonally adjusted insured unemployment rate moved up by 0.9 percentage points sequentially to 2.1% in the week ended March 21, which is the highest in more than seven years. The labor market has been hit hard by the pandemic-induced disruptions that forced businesses to discontinue operations.

The situation is expected to worsen in the coming weeks as the authorities are stepping up their efforts to prevent the spread of the epidemic, including strict implementation of social distancing. Most businesses, especially small scale firms, are finding it difficult to meet their expenses, including payment of wages, resulting in widespread layoffs.

Bleak Outlook

Experts believe the full picture is yet to emerge and predict that the unemployment numbers would rise further in the coming weeks. It is very likely that the authorities have not fully processed the claims they have received and also not all the eligible persons have submitted their claims due to the huge rush.

A rescue package announced by the government has made a wider range of workers eligible for the temporary financial allowance. Meanwhile, there is growing apprehension that the economy is headed into a recession, which is again not good for the job market. The national unemployment rate, which dropped to a 50-year low last month, is likely to bounce back in the coming months.

Secretary of Labor Eugene Scalia in a statement said, “Similar to last week’s unemployment claims numbers, today’s report reflects the sacrifices American workers are making for their families, neighbors, and country in order to ‘slow the spread.’ The Administration continues to act quickly to address this impact on American workers.”

In the present scenario, the only hope for employers and workers is the stimulus package recently passed by the government and the proposal to increase the amount being paid as unemployment benefit.

Meanwhile, the Wall Street took a beating from the dismal jobs data and US stocks plunged in early trading on Thursday.