Businesses are closing left and right, with neither small nor large companies unable to escape the toll of extended lockdowns and low consumer spending. A so-called “retail apocalypse” has wiped out even the major players in retail as a wave of Chapter 11 bankruptcy filings sweeps across the sector.
Before this whole health crisis hit the US, the all-time high for new unemployment claims filed in a single week was 695,000, recorded back in 1982. During the Great Recession of 2007-2009, which was the country’s last serious downturn, weekly claims were 665,000 at their highest point, reached in March of 2009.
Those that lived through the recession in the early 1980s as well as the Great Recession remember the severe financial stress Americans were under, but it is almost laughable when put up against what we are facing now.
As of June 20, the number of Americans receiving weekly unemployment benefits sat at a staggering 33 million. This figure is at least five times larger than those recorded even at the peak of the Great Recession over a decade ago.
Even as some jobs returned in May and June, economists warned that the latest round of layoffs were cause for even greater concern. After all, the first wave of unemployment was made up of many temporary job losses as businesses closed their doors during the lockdown period. Now, many of the layoffs will be permanent as bankrupt stores shut down for good and larger companies scale back their numbers of workers to cut costs.
According to CEO of Wolf Street Corp. and Fed policy expert Wolf Richter, the number of continuing claims that were filed last week under all state and federal unemployment programs–which includes gig workers–marks the highest weekly total ever seen in the United States. In the week ending July 4th, this statistic was reported as 32.92 million, an increase of 1.41 million from the week before. So even though the number of people receiving benefits from state governments has gone down, the total number of claims continues to rise since it includes those who apply for the Pandemic Unemployment Assistance (PUA) program, which covers independent contractors and the self-employed as well as regular employees.
The one thing keeping the economy from spiraling further into chaos has been the aid pouring in from the federal government. Millions of Americans who experienced job losses have been able to keep up with rent payments and grocery bills thanks to stimulus packages that injected cash into hurting households. However, many of those emergency measures will expire at the end of the month. What happens then? Well, up to 20 million Americans could be pushed into dangerous financial territory, and with other protections like eviction moratoriums also due to expire, we could very well see a spike in poverty and homelessness across the country.
This is what an economic collapse looks like, and it is just getting started.
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