According to weekly data released by the Labor Department on Thursday, more than 1.43 million people applied for unemployment benefits for the first time last week. This is the second-straight week that the number has gone up, and the 19th week saw more than a million claims by the US. For reference, the former peak was in 1982, when the weekly figure was 695,000.
According to data from the Bureau of Economic Analysis, the extent of economic losses from the coronovirus pandemic coincided with a record annual growth of 32.9 percent GDP in the second quarter on Thursday.
The government was forced to put a brake on the economy to prevent the spread of the virus before this number contrasted with strong growth. The average GDP has been around 2 percent on an annual basis, but large-scale shuttering of businesses, shops and restaurants has curbed consumer spending, which accounts for about 70 percent of the US economy.
Although economic activity withdrew in May, a spike in coronovirus cases in Sunbelt states has generated a new round of shutdowns, leaving many more Americans out of work.
Federal Reserve Chairman Jerome Powell has repeatedly warned of sluggish economic recovery if millions of workers cannot return to their previous jobs and do not need to acquire or learn new skills.
At a press conference on Wednesday after the Fed’s monetary policy meeting, he said “it seems that data is pointing to a decrease in the pace of recovery.”
Already, millions of Americans are struggling to put food on the table. According to the Census Bureau’s Weekly Household Survey, released on Wednesday, nearly 24 million Americans said they “never had enough to eat”, with 5.4 million saying they “often didn’t have enough to eat” .
Moody’s vice president Madhavi Bokil said, “The fact that the initial unemployment claim for the second week is worrying and the consumption of newborns is in danger of declining.” “Specifically, the cessation of $ 600-a-week supplemental federal unemployment insurance benefits would create an income bracket for unemployed workers.”
In addition to the benefits, $ 600 per week has been set for Americans as part of the CARES Act, which ends at the end of the month. For many families, excess cash is a lifeline, food, housing, even life-saving medicine. Congress is still deadlocked on whether to increase profits, with some lawmakers arguing that the size of the payout eliminates incentives to work.
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However, the debate in Washington continues, with fares increasing this weekend – and by the end of the year, 29 million Americans may face expulsion, according to the COVID-19 Eviction Defense Project, the Aspen Institute And an advocacy partnership center with Bell Policy.
Grant Thornton chief economist Diane Swonk said the Fed is clearly more concerned about the economy than it was a month ago.
“The resurgence of COVID-19 cases and the effects on the economy are reducing the Fed’s concern. Powell is ready to do more, but is limited, and Congress needs to step up to the plate,” Swonk said.