In the prevailing circumstances of the various economies hit by COVID-19, the United States Senate and the White House have unanimously passed a $2 trillion stimulus package for the United States economy and the millions of US citizens shrunken by the coronavirus epidemic.
As reported by the leading US bank, Morgan Stanley, the US economy will shrink 5.5% in 2020 and the same drop is said to be the steepest drop since the year 1946. Along with this a contraction of 38% is predicted for the second quarter. The usual move of big economies of the world is to bail out their financial systems to keep the credit flowing in the market and let the real economy absorb the blow through unemployment. However, this move is of no use in the present circumstances.
The problem of unemployment has hit the US economy in a large scale as round about 6.65 million people have filed for unemployment. Before this round about 3.3 million people has filed for unemployment which brings the total number of unemployed people to 9.95 million. The rate in which the people have filed for unemployment in the last two weeks is greater than that filed in the past ten months.
As stated by Sir William Rodgers, the former chief economist at the US Department of Labour, “We are at the mercy of the virus.” Due to lockdown in large parts of the country, millions of people have lost their jobs. The Economists are forecasting a rise to 4% unemployment. The Oil and gas companies are laying off workers as oil prices have collapsed highly and the engineering firms are cutting down their staff as the airline industry has also halted.
According to the March report given by the Labour Department, the US economy has lost 701,000 jobs last month compared to the 100,000 which was expected. However, this report did not highlight the data regarding the 10 million Americans filing for unemployment insurance. The Bureau of Labour Statistics stated, that the household survey response rate was 10 percentage points lower than in recent months and on the other hand the establishment survey was about 9 percentage points lower than usual. The figure shown by the Bureau was however collected before the General Electric, Macy’s, and Marriott laid off their workers. According to the reports, African American unemployment spiked to 6.7% in the month of March and Asian American rose from 2.5% to 4.1%.
Tags : Morgan Stanley, Covid 19,Bureau of Labour Statistics