COVID is fast changing U.S. jobless rate
WASHINGTON — New government data Thursday on layoffs underscored both the severity of the looming unemployment crisis and the challenge Congress and the White House face in deploying effective responses to the coronavirus.
After years of steady economic growth that drove unemployment to a 50-year low, the pandemic has suddenly raised the specter of joblessness on a scale not seen since the onset of the Great Depression.
And it has challenged policy makers and Congress to recognize that the current medical emergency is crippling the economy in ways that are fundamentally different from past financial crises — and may require strategies that are closer to those adopted in wartime than to conventional emergencies.
Bailouts for hard-hit industries and small businesses, for example, could help them survive longterm. But such policies do little to help the millions of workers who are losing all or much of their ability to meet day-to-day living expenses.
Similarly, traditional financial relief packages may not be effective against the kind of panic buying and hoarding that have emptied supermarket and drugstore shelves.
On Wednesday, Treasury Secretary Steven T. Mnuchin warned lawmakers that unemployment could rocket to 20%.
While Mnuchin’s warning may have been a worst-case scenario aimed at goading Congress for quick approval of President Trump’s $1-trillion economic stimulus plan, it was nonetheless far more pessimistic than the administration has ever been, and it spoke to the near certainty of an imminent recession.
The Labor Department’s report Thursday on applications for unemployment insurance during the week ending last Saturday showed a jump of 33% as 70,000 more people filed for jobless benefits compared with the prior week, led by California, Washington state and Nevada.
And it wasn’t until this week that many employers began to send workers home in response to widespread lockdown orders for restaurants, bars and other venues where people congregate in large numbers, and millions of Americans began to shelter in place.
“Today’s jobless claims statistics provide the confirmation, if it was needed, that the economy has just fallen over the cliff and is turning down into a recession,” said Chris Rupkey, chief financial economist at MUFG Bank in New York.