Both small and large businesses are forced to lay off employees or put them on unpaid leave.
A week ago, nearly 3.3 million Americans applied for unemployment benefits. This figure is expected to grow rapidly in the coming weeks: according to preliminary forecasts, about 40 million people will be out of work by mid-April.
Before the pandemic hit the United States, there were 5.8 million unemployed people – 3.5 percent of the labor force, with a total of 164.6 million. In the previous six months, this indicator has changed little, which is one of the key indicators of the healthy state of the economy.
On Tuesday, investment Bank Goldman Sachs Group published a forecast that the decline in the US economy in the second quarter will be even sharper than previously expected: 34 percent instead of 24.
According to Goldman Sachs economists, the unemployment rate in the United States will reach 15 percent by the middle of the year, meaning 25 million people will be unemployed. Unemployment was previously forecast to reach 9 percent.
The head of the Federal Reserve Bank of St. Louis, James Bullard, believes that unemployment in the second quarter can reach 30 percent, and GDP will fall by 50 percent.
It is estimated that 190,000 stores have closed in the country, which is about 50 percent of the total number of retail outlets. On Monday alone, major retailers Macy’s, Kohl’s and Gap announced that they were laying off a total of 290000 employees.
The John F. Kennedy Center for the performing arts in Washington has put 96 musicians of the National Symphony orchestra on unpaid leave, although Congress last week agreed to allocate $ 25 million to help this cultural facility, where all concerts are currently canceled.
Some employers initially intended to continue paying employees ‘ salaries, but in many cases, this decision was abandoned because it is unclear when the pandemic may end.
Mckinsey & Company, a consulting firm, estimates that about a quarter of American households are already living paycheck-to-paycheck, and 40 percent of Americans can’t cover a $ 400 windfall without borrowing.
The $ 2 trillion economic aid package approved by Congress and signed by Trump last week includes an expansion of unemployment benefits. Usually, the States pay the unemployed only a small part of their normal salary, but under the anti-crisis plan, they will be paid an additional $ 600 a week over the next four months.
Goldman Sachs economists forecast a recovery in the third quarter and a 19 percent increase in GDP.
“Our estimates suggest that just over half of the short-term losses will be compensated by the end of the year,” experts say.
Leaders in many States across the country have ordered residents not to leave their homes in the coming weeks, except in cases of urgent need: to buy food or medicine, seek medical help, or to play sports alone or with family.
Because of these orders, many non-essential establishments are forced to stop operating, although the interpretation of the concept of “first necessity” varies from state to state.