The new applications brought the total number of jobless claims since mid-March to 33.3 million – or about 20% of the US workforce. On the other side of the Atlantic Ocean, the EU bloc’s executive arm predicts a recovery in 2021 but warns that the uncertainty is exceptionally high. The Commission predicts a decline in economic activity this year of 7.5% and slightly more than that for the eurozone. That means unemployment.
In today’s blog post, we unravel the current economic situation of both places. They are facing a hard time and we believe it is important to know what are the perspectives for the jobless in the nearest future.
In the US, the number of people collecting benefits has continued to rise. This is happening despite recent moves to start re-opening in some parts of the country. The impact has been felt across the economy, affecting medical practices, restaurants, and administrative workers among many others.
The US unemployment rate also has risen to 14.7%, with 20.5 million jobs lost in April. Of course, you must know that this is due to the coronavirus pandemic, which is devastating to the economy. Just two months ago, the unemployment rate was 3.5%. Since the coronavirus entered the US, the country has been suffering its worst growth numbers in a decade. It is the worst retail sales report on record. Besides, declines in business activity not seen since the 2008 financial crisis.
As in the US, EU governments are intentionally blocking economic activity to contain the virus, so a sharp downturn is inevitable.
The Commission describes the downturn as a recession of historic proportions. The impact will be uneven, conditioned by how quickly the lockdowns can be lifted and by the importance of services such as tourism in the national economies. The forecasts for specific countries do indeed point to an especially severe impact in some that are popular tourist destinations.
The deepest predicted contraction of all is for Greece, Spain, and Italy are forecast to have declined in excess of 9%. Inevitably, such an extensive impact on economic activity will mean job losses. The report predicts an increase in unemployment in every EU state. The two worst for predictions for this year are unemployment rates of 19.9% for Greece and 18.9% for Spain.
It will be harder, the Commission says, for young people to get their first jobs. The report also notes that unsuccessful trade negotiations with the UK (due to the Brexit) could further impede any recovery. If the US and EU do not contain the pandemic and the economy remains shut, the unemployment rate would rise further and many of the job losses that we currently view as temporary would likely become permanent.