The number of new applications for unemployment benefits in the United States for the third week in a row exceeded 5 million. This is evidenced by the US Department of Labor. So, from April 5 to 11, the corresponding figure reached 5.25 million. A week earlier, the value was 6.62 million, and before that - 6.87 million.

In less than a month, more than 22 million people applied for unemployment benefits in the United States. The weekly increase in the number of applications observed since mid-March was a record for the entire time of observations - since 1967. So, even during the global financial crisis of 2008-2009, the number of requests did not exceed 670 thousand a week, said Sergey Suverov, senior analyst at BCS Premier, in an interview with RT.

“The coronavirus pandemic and the subsequent introduction of quarantine measures led to the suspension of production, the closure of small and medium-sized enterprises, as well as companies whose main activity was tied to the flow of tourists and the provision of services. As a result, the heads of the corporation were forced to cut employees, which caused a sharp jump in the number of unemployed, ”the expert explained.

According to official data from the World Health Organization (WHO), the total number of people infected in the world is close to 2 million, of which nearly 130 thousand have died. At the same time, the largest number of infected was registered in the USA - about 600 thousand.

According to analysts at JP Morgan, in April, the US unemployment rate could rise to 20% from 4.4% in March. The last time a similar indicator could be observed back in the summer of 1938, when the country was experiencing the Great Depression. This is evidenced by the data of the Federal Reserve Bank of St. Louis.

The current situation in the US employment sector is aggravated by the peculiarities of the country's labor legislation. This point of view in an interview with RT was expressed by the head of the laboratory of the Institute of Applied Economic Research, RANEPA Alexander Abramov. 

“In the United States, workers are virtually unprotected from layoffs. More than a third of employees work without a part-time employment contract. In addition, the state does not impose any sanctions on companies if they dismiss workers. To keep the business afloat, corporations are now simply dismissing the staff, hoping to recruit new employees after the crisis, ”Abramov explained.

According to the forecast of JP Morgan, in the near future the number of unemployed in the USA risks exceeding 25 million. At the same time, according to RT, TeleTrade chief analyst Peter Pushkaryov, in practice the value may turn out to be much higher.

“According to the federal laws of the country, unemployment benefits can be claimed not only by those who actually received the order of dismissal, but also temporarily quarantined if they are on forced unpaid leave. However, even without taking into account Americans temporarily on vacation, the rate of job loss has already taken the scale of a natural disaster, ”said the expert.

Emergency situation

According to experts, a record increase in unemployment could result in a sharp decline in the US economy. According to the Congressional Budget Office, in the second quarter, US GDP in annual terms may decline by more than 28%. At the same time, Morgan Stanley experts predict a collapse immediately by 38%.

“The closure of part of production facilities, shops and companies, as well as subsequent massive reductions, will put strong pressure on the economy. In the USA, the service sector accounts for up to 75% of the total economy, so that GDP risks falling in the short term by more than 25%. At the same time, the consequences of unemployment growth for the economy are still partially stopped by the actions of the authorities, ”said Peter Pushkaryov.

In late March, Donald Trump signed into law on financial assistance to the economy for a total of $ 2 trillion. As expected, the funds will be directed to promote business, industrial sectors, as well as the payment of unemployment benefits. 

“At the same time, the stimulus spending launched by the US government is driving up the budget deficit. At this rate, by the end of the year, the negative difference between the revenues and expenses of the US treasury can grow almost four times - from $ 1 trillion to $ 3.8 trillion, especially considering the extremely low tax revenues. Such a situation risks turning into even greater growth in public debt, ”said Gennady Nikolaev, an expert at the Academy of Financial and Investment Management, in an interview with RT. 

According to the US Treasury, since the beginning of 2020, the country's national debt has grown by almost $ 1 trillion and for the first time in history exceeded $ 24 trillion. At the same time in the United States continues to increase debt of the population, companies and financial institutions. As calculated at the American Institute of International Finance (IIF), the total debt burden of the state is about 327% of GDP and remains one of the largest in the world.

According to analysts, the current state of affairs risks weakening Trump’s position ahead of the presidential election scheduled for November 3, 2020. 

“Quarantine and the shutdown of production are damaging Trump’s image in the eyes of voters, as the population loses confidence that it will be able to take the pandemic and the risks associated with it under control. Therefore, the longer the economy is closed, the greater the chance for Democrats to increase the number of loyal voters, ”concluded Peter Pushkaryov.