Unemployment rate in the US due to Covid-19 may increase to 25%, according to leading macroeconomic influencers

GlobalData Thematic Research 15 May 2020 (Last Updated May 15th, 2020 07:30)

Unemployment rate in the US due to Covid-19 may increase to 25%, according to leading macroeconomic influencers

The latest report from the US Labour Department pegs the unemployment rate at more than 20%. Although new unemployment claims have slowed down, the unemployment rate is still one of the highest since the Great Recession.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, tweeted on the US Labour Department’s latest report on unemployment claims.

The report notes that an additional 2.98 million claims were filed over the last two months bringing the total unemployment claims to 36.5 million.

McBride noted that the unemployment rate is expected to be more than 20% or even 25% by the time the next official report is released.

Jonathan Davis

Jonathan Davis, a wealth adviser and economist, shared an article on the rise in food prices in the US. The article is based on a report from the US Labour Department, which notes that consumers in the US the prices for groceries increased by 2.6% in April. This was the single biggest increase since February 1974.

Davis noted that inflation is rising with respect to groceries, while deflation is making its way into the property market.

Armine Yalnizyan

Armine Yalnizyan, an economist, tweeted on the $50bn fund announced by the New Zealand government to deal with the impact of the Covid-19 pandemic. The fund announced by the government is equal to 17% of the country’s GDP and aims to reduce unemployment and save jobs within two years. It relies on long-term borrowing, which could increase government debt to 53.6% of GDP by 2023.

Under the plans announced by the government, Covid-19 wage subsidy will be extended by eight weeks. Approximately $3.3bn will be spent on health and education and another $3bn on infrastructure projects to create jobs.

Edward Stringham

Edward Stringham, Professor at Trinity College, shared an article on the decline in the filing of new unemployment claims. The article notes that the total number of unemployment claims crossed 36 million but new claims continued to decline.

The number of unemployment claims peaked towards the end of March at 6.87 million but have since declined over the last few weeks. At the end of the first week of May, new claims totalled 2.98 million.