New U.S. labor market data released revealed another massive increase in initial jobless claims for the week ended March 28. Tow weeks ago, the U.S. Department of Labor reported that the number of Americans newly applying for unemployment benefits jumped to 3,283,000, a figure completely out of proportion with previous historical peaks. According to the DOL, previous peaks had occurred in the fall of 1982 and in March 2009, when initial claims had reached 695,000 and 665,000, respectively. The data for the week ending March 28 shows a massive spike to 6,648,000 – a number that’s quite literally off the charts.
The rapid (albeit expected) rise in unemployment was driven by the measures taken to contain the COVID-19 epidemic in the United States, which has led to widespread closures of bars, restaurants and movie theaters as well as halting most travel, shocking the transport and hospitality industries to the core. Commenting on the latest figures, Secretary of Labor Eugene Scalia said that “similar to last week’s unemployment claims numbers, today’s report reflects the sacrifices American workers are making for their families, neighbors, and country in order to slow the spread.”
Scalia added that “the Administration continues to act quickly to address this impact on American workers. That includes a rule the Labor Department adopted yesterday to implement the paid leave provisions of the Families First Coronavirus Response Act, and the Department’s work with the States to make available the enhanced unemployment benefits provided in the CARES Act, which the President signed last week”.
While yesterday’s historic figures are certainly alarming, it’s difficult to compare the current situation with past crises. Never before have we seen such a sudden stop of economic activity, but while that results in extreme numbers like we’ve seen today, it may also enable a quicker recovery once the most extreme measures are lifted. While most epidemiologists deem those measures essential in managing the outbreak, critics argue that the damage inflicted on the economy could be worse than the threat posed by the disease itself. President Trump himself sympathizes with such concerns, having repeatedly warned that “we cannot let the cure be worse than the problem.”
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