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The past three weeks have marked one of the most devastating periods in history for the American job market. The chart shown above is almost unbelievable — it shows that 6.6 million workers filed for unemployment benefits last week, double the previous record.
On Friday, new data showed the US economy shed 701,000 jobs in March. It was the first monthly jobs loss since September 2010, and much worse than analysts had expected. The unemployment rate moved up to 4.4%, from a near 50-year low of 3.5%.
Big picture: The March report’s drop in jobs “will likely be dwarfed by job losses closer to 10 million in April, with the unemployment rate rising above 10%,” economists at Citi said in a research note.
The next jobs report is due on May 8, and will be a far better measure of the pandemic’s impact. James Bullard, president of the Federal Reserve of St. Louis, said the unemployment rate could soar as high as 30%.
“Sadly we’re only at the start of this process. There are around 18 million jobs, mostly in the service sector, at risk from social distancing,” said James McCann, senior global economist at Aberdeen Standard Investments.
Get ready for wartime levels of national debt
Governments are launching one rescue package after another in hopes of preventing economic catastrophe as the coronavirus pandemic rampages around the world.
In most countries, political opposition to spending increases funded by borrowing has vanished in the face of a potential global depression. But the trillions of dollars in support promised to households and businesses will push up budget deficits to their highest levels since the global financial crisis.
In the United States, the wave of stimulus spending could push debt as a share of the economy to levels not seen since the end of the World War II.
Spending increases and tax cuts have already pushed US government debt up to $17 trillion, doubling the country’s debt to GDP ratio to nearly 80% since 2008. According to Commerzbank, the coronavirus relief packages approved so far will push that figure to 96% by 2022.
“Should Congress pass further aid packages and should the economic damage be greater than previously assumed, the previous record set in 1946 (106%) could be surpassed,” Bernd Weidensteiner, one of the German bank’s economists, wrote recently.
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