Nearly 3.2 million laid-off workers applied for unemployment benefits last week as the business shutdowns caused by the viral outbreak deepened the worst U.S. economic catastrophe in decades.
Despite the bleak report, the U.S. stock market has continued to make gains since the crash in late February.
Roughly 33.5 million people have now filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors and slash their workforces. That is the equivalent of one in five Americans who had been employed back in February, when the unemployment rate had reached a 50-year low of just 3.5%.
On Friday, the government will issue the April jobs report, and it’s likely to be the worst since modern record-keeping began after World War II. The unemployment rate is forecast to reach at least 16%, the highest rate since the Great Depression, and economists estimate that 21 million jobs were lost last month. If so, it would mean that nearly all the job growth in the 11 years since the Great Recession ended has vanished in a single month.
Even those stunning figures won’t fully capture the magnitude of the damage the coronavirus has inflicted on the job market. Many people who are still employed have had their hours reduced. Others have suffered pay cuts. Some who lost jobs in April and didn’t look for a new one in light of their bleak prospects won’t even be counted as unemployed. A broader measure – the proportion of adults with jobs – could hit a record low.
The official figures for jobless claims may also be under-counting layoffs. Surveys by academic economists and think tanks suggest that as many as 12 million workers who were laid off by mid-April did not file for unemployment benefits by then, either because they couldn’t navigate their state’s overwhelmed systems or they felt too discouraged to try.
As the economy slides further into what looks like a severe recession, economists are projecting that the gross domestic product – the broadest gauge of economic growth – is contracting in the current April-June quarter by a shocking 40% annual rate. As it does, more layoffs appear to be spreading beyond front-line industries like restaurants, hotels, and retail stores.
And yet, stocks are rebounding.
Stock markets and the price of oil pushed higher on Thursday ahead of the latest weekly jobless claims figures in the U.S. and after China reported a rise in exports as its pandemic lockdown eased.
As more countries start to remove the draconian limits on business and public life, investors are trying to gauge how quickly the global economy might bounce back.
The Dow Jones Industrial Average and the S&P 500 were up 1.2% as of 11 a.m. Thursday.
In Europe, France's CAC 40 gained 0.8% to 4,470. Germany's DAX also added 0.8%, to 10,692, while Britain's FTSE 100 rose 0.7% to 5,895.
The Chinese trading data showed an encouraging 3.5% rise in exports in April, driven by electronics shipments and textiles, which included a surge in mask exports.
The data shows China's exports to the United States rose 2.2% in April, while imports of American goods fell 11% in a reflection of weak Chinese industrial and consumer demand despite the lifting of most anti-virus controls.
Imports fell 13.7% from a year earlier to $179.6 billion, worse than the first quarter's 2.9% decline. But total exports rose to $200.3 billion, a turnaround from the 13.3% contraction in the three months ending in March.
Forecasters warned that strength is unlikely to last as the coronavirus pandemic depresses global consumer demand.
Comments by President Donald Trump raising the possibility of further trade friction with Beijing have also worried investors hoping for better times as other economies begin to reopen from pandemic shutdowns.
Mr. Trump said he would soon assess progress in a preliminary trade agreement with China that took effect in January, extending a truce in a painful tariffs war between the world's two biggest economies.
The possibility of revived friction over trade at a time when economies have been slammed by the pandemic and resulting travel restrictions has rattled investors in Asia, where China is the main driver for regional growth.
This story was reported by The Associated Press. AP Writers Joe McDonald and Kelli Kennedy contributed to this report.
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