The release of the US Initial Jobless Claims data on Thursday showed a surprise leap in the number of Americans filing claims for jobless benefits for the first time.
The weekly unemployment claims report from the Labor Department revealed that initial claims for state jobless benefits last week rose by 31,000, unexpectedly increasing the total to 742,000.
Analysts had forecast a decline to 707,000 after the prior week’s figure was revised up to 711,000. This was the first increase in six weeks with the effects of the coronavirus being blamed.
The sharp increase in the number of applications for unemployment benefits highlights the continued challenges for an economic recovery in the US, the world’s largest economy, as the coronavirus infection rate increases across the country.
Pandemic Worsening in the US
With many states in the US imposing new rounds of social distancing restrictions, more and more businesses are being affected by COVID-19. the number of infections in the country rose above 11 million with the death toll in the US surpassing 250,000.
The situation is worsening too. The number of people hospitalized with COVID-19 increased to a new record high on Wednesday, rising past 79,000 with the death count now hitting its highest since the beginning of May.
Many are expecting the economic situation to worsen in the US alongside the pandemic. With the six-month government subsidies and programs ending in December for many, and fiscal stimulus petering out, the economic rebound seen over the last few months looks in serious jeopardy.
How long lockdowns continue in the US and how quickly businesses can rebound remains to be seen. However, a big concern in the US, whose GDP is around 70% consumer spending driven, is that consumer confidence is falling. This will only worsen with fewer people in employment and there is less money to spend in the financial ecosystem.
