Great depression — What is other side of the story behind 17 Million Unemployment Benefit Registrations in America?
Nearing a blow harder than the Great Depression, America is facing its economy at a standstill.
A whopping 17 million people have filed for US unemployment benefits in the last three weeks. The shutdown due to the coronavirus outbreak has put the state labor department in a bind while creating a massive depression in the economy of the country.
- 17 million people have filed for US unemployment benefits in the third week.
- Economic experts are in a bind and don’t know what the long term impact will be.
- Federal reserve is lagging in processing the application.
Workers in every facet of the economy have been laid off due to the shutdown. From the leisure and hospitality industries to the manufacturing and construction industries, people are losing jobs continuously.
What is the story behind the numbers?
As per the economists, the unemployment rate is likely to go beyond 15%, which is unlike any time since the second world war. The gross domestic product will fall down an annualised 25% in this quarter from April to June.
Even if the economy starts to re-open in mid-May, more than 20 million Americans will have lost their job with the economy likely having contracted around 13% peak-to-trough, more than three times deeper than the global financial crisis.James Knightley, chief international economist at ING Financial Markets
“It will be a gradual re-opening of the economy, so a return to ‘business as usual’ is many months away. Throw in crippling financial losses and a legacy of defaults and it means we estimate U.S. economic output won’t return” added Knightly.
The economy experts are confused and terrified
While the effect of the outbreak has been groundbreaking on the economy, the experts are still not sure what would be its long term impact once the dust settles down.
“These figures don’t reflect a lack of demand,” said Dean Baker, a senior economist at the Center for Economic and Policy research and visiting professor at the University of Utah. According to him, this is in the control of the country and that it is deliberately shutting down the economy unlike the recession in 2008.
“NABE Outlook Survey panelists believe that the US economy is already in recession and will remain in a contractionary state for the first half of 2020, as the COVID-19 pandemic severely restricts economic activity,” said NABE President Constance Hunter, CBE, chief economist, KPMG.
Federal reserve is loaning another $2.3 trillion to the small and medium sized businesses and the cities and states in the US. However, this is not going to be enough since the response to the filed applications is slow and lagging manifolds. The backlogs are still being processed, while economists are worried that this might give a jolting blow to the economy.
Stay-at-home for the win
“People have been asked to put their lives and livelihoods on hold, at significant economic and personal cost. We are moving with alarming speed from 50-year lows in unemployment to what will likely be very high, although temporary, levels,” Federal Reserve Chairman Jerome Powell said in an online discussion with the Brookings Institution.
In what can only be called as the most staggering hit to the world, America is reeling through it with its own set of guidelines and measures that include social distancing. The stay-at-home orders have put limits to the businesses all over the country and have led to loss of jobs for millions.