Washington: Roughly 2.1 million people applied for US unemployment benefits last week. It is a sign that companies are still slashing jobs in the face of a deep recession. This is happening as more businesses reopen and rehire some laid-off employees. However, the number of applicants for jobless aid is certainly a headache for the US government. Experts have predicted that jobless aid applications will rise in near future.
Jobless rate
About 41 million people have now applied for aid since the coronavirus outbreak intensified in March. However, not all of them are still unemployed. The Labour Department’s report Thursday includes a count of all the people now receiving unemployment aid: 21 million. That is a rough measure of the number of unemployed Americans.
The national jobless rate was 14.7% in April, the highest since the Great Depression. Many economists expect it will near 20 per cent in May.
Reopening of businesses
American states are gradually restarting their economies by letting some businesses reopen with some restrictions. Among them are gyms, retail shops, restaurants, hair and nail salons. Some of these employers, including automakers, have recalled a portion of their laid-off employees. So the number of people receiving unemployment benefits has fallen.
First-time applications for unemployment aid, though still high by historical standards, have now fallen for eight straight weeks. In addition to those who applied last week, an additional 1.2 million have applied for jobless aid. These figures aren’t adjusted for seasonal variations. So they are included in the government’s overall data.
Assessment of consumer spending
Analysts are monitoring incoming economic data to gauge how consumers are responding as many retail establishments reopen. Jobs won’t return in any significant way as long as Americans remain slow to resume spending.
Data from Chase Bank credit and debit cards shows that consumers have slowly increased their spending. The increase came after the government distributed stimulus checks in mid-April. Consumer spending had plunged 40 per cent in March compared with a year earlier. However, since then it has rebounded to 20 per cent below year-ago levels.
Most of that increase has occurred in online shopping, which has recovered to pre-virus levels. It had tumbled by 20 per cent when the virus was at its peak in the US. But offline spending, which makes up is still down 35 per cent from a year ago, according to Chase.
Agencies
