Another 4.4M Americans Are Unemployed as Economic Crisis Worsens

Workers in the United States are filing jobless claims at an historic rate. With the latest numbers released today, some 26 million Americans have filed for unemployment insurance in the past five weeks. These numbers are exponentially higher than what was seen even during the height of the 2008 Great Recession.

A Dire Warning

The rising levels of unemployment are a serious warning regarding the health of the economy. Consumer spending makes up some 70% of the entire GDP of the United States—and high levels of unemployment create for a bleak economic outlook. With bankruptcies slowly making their way through the supply chain, there is a real fear that this spiral could overshadow the COVID-19 pandemic in severity. As economists have warned, we are amid a deflationary crisis that is caused by depressed demand. Profitability for companies has fallen, and workers have been laid off en masse as a result. States are now reporting that 4.4 million Americans have filed for unemployment in the past week. [Yahoo Finance] If this lockdown continues, the pace of total jobless Americans will likely continue. Despite President Trump’s eagerness to reopen the economy, his hands are tied. COVID-19 is still claiming over 2,000 lives daily in the United States, and plans to reopen remain difficult to implement.

A V-Shaped Recovery Looks Unlikely

The IMF still maintains that the world will see a ‘V-shaped recovery.’ The worst of the crisis will take place this year, and 2021 will see a sharp bounce, according to the IMF. However, this is becoming increasingly unlikely. The IMF’s optimism is tempered by its own director’s grim prediction: that 2020 will see an economic recession unlike anything since the Great Depression. How exactly a world economy bounces back from a depression to mega-growth in 2021 is unclear. As jobless claims accumulate, hard decisions will have to be made about the future of the lockdown. At the time of writing, financial markets are showing some green despite the bad news. The S&P 500 is up some 0.7%. Bitcoin is also showing some strength and is now trading above the $7,000 mark after declining due to oil’s plunge earlier this week.