The U.S economy was expanding for more than a decade. However, the coronavirus pandemic changed the situation and now millions of people are looking for a job. For the last several weeks, people are standing in line to apply for the unemployment benefits in different parts of the country. The state of the labor market is far from being ideal.
On Thursday, the Labor Department released data that shows the extent of the ongoing crisis. According to the Labor Department, last week 4.4 million people applied for the benefits. Hopefully, this number is less than two weeks ago, when more than 5 million applied for unemployment claims.
Nevertheless, in the past five weeks more than 26 million Americans, more precisely 26.4 million made the decision to seek financial aid from the government. Moreover, the five-week total surpassed all of the job gains since the Great Recession.
Also, the latest result surpassed the expectations, as economists expected that 4.3 million people would apply for the benefits.
Labor market and U.S. economy
The world’s largest economy and its labor market has to deal with numerous challenges. Unfortunately, all of the economic indicators show that the economy is moving toward the worst downturn since the Great Depression.
Importantly, jobless claims are seen as the most current way of measuring how deeply conditions have been affected by social distancing connected with coronavirus.
Moreover, the insured unemployment rate, which compares those currently receiving benefits to the size of the labor force increased by 2.8% to 11%. It meant that, in comparison with the last week, the insured unemployment rate rose by 2.8%.
Importantly, that translates to 23% when the Labor Department will release its unemployment rate calculation in two weeks. The previous highest rate dates back to the Great Depression when this rate was as high as 24.9%.
It is important to mention that, the total is far worse anything the U.S. has seen before, even when compared with the previous worst result. As a reminder, the previous high dates back to October 1982, with the one-week peak of 695,000.
Furthermore, even though the total number of claims dropped with the previous week, the continuous claims figure almost reached 16 million. Thus, compared with the previous period this number increased by 4 million. Also, the four-week moving average rose to 5.8 million.
Moreover, the totals remain elevated due to the fact that individual states are trying to deal with the influx of new claims. The government unveiled rescue programs to help people who lost their jobs as a result of the coronavirus pandemic. It will take time until the labor market will get back on track and it depends on various factors.
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