American unemployment rate rise to 20%-highest level since 1929

US jobless claims swell to 26.5 million in five weeks

An economic crisis is a steep and sudden downturn of the economy. In terms of data, it shows up in a lot of places — GDP growth, unemployment numbers, productivity, and more. The unemployment numbers and GDP growth rate both indicating that American economy is in crisis. The unemployment rate has climbed to 20%. It was around 10% during the “Great Recession” of 2008-09.

According to some of the economic experts and Federal Reserve estimate, despite losing millions of jobs due to the coronavirus crisis so far, the worst is yet to come.  Economists at the Fed's St. Louis district project estimates that total employment reductions of 47 million, which would translate to a 32.1% unemployment rate. This means that America could face the highest levels of unemployment even worse than the Great Depression of 1929.

The American GDP growth would be in negative in 2020. The IMF has predicted -5.9% GDP growth for American economy. It means a severe crisis in American economy.  

More than 4 million Americans applied for unemployment benefits last week, bringing the five-week total to 26.5 million in the steepest downturn for the US labour market since the Great Depression of 1929.

Initial jobless claims of 4.43 million in the week ended April 18 followed a slightly downwardly revised 5.24 million in the prior week, according to Labor Department figures. The median estimate of economists was for 4.5 million claims.

Most US states continued to see initial claims decline from prior weeks on an unadjusted basis - a sign that layoffs could be slowing a bit. Even so, it's unclear if the claims figures reflect Americans still losing their jobs by the millions each week, or if people are getting through on jammed websites and phone lines to apply for benefits after weeks of attempts.

Continuing claims, or the total number of Americans receiving unemployment benefits, rose by 4.1 million to an all-time high of 16 million in the week ended April 11. That pushed the insured unemployment rate to 11 per cent - the highest on record.

The American economy seems to have transformed in a matter of weeks as the coronavirus has brought activities across the country to a grinding halt. Not only did the US fail to anticipate the public health crisis caused by coronavirus, but it appears to be unprepared for the economic consequences of getting the pandemic under control.

Ultimately, businesses and industries translate to people, as in, workers, and the workers who will be hardest hit by layoffs and shutdowns are those who can’t afford it. According to estimates from the US private job quality index more than 37 million jobs in the US are vulnerable to layoffs in the near term, 35 million of which are considered low-income.

                                                                                                  Khalid Bhatti