Tag: Economy

Unemployment in the US surpasses that during the Great Recession

Unemployment in the US surpasses that during the Great Recession

Figures indicated that almost 1 in 4 of all working Americans have now filed for unemployment benefits.

Even as the lockdown is being lifted across all the states in the USA, the number of people filing unemployment benefits continues to climb. Since mid-March, roughly 38.6 million people have entered the dole, almost a quarter of the workforce. The weekly numbers of people seeking benefits have fallen since the peaks of March but more people are also starting to enroll under the government’s pandemic relief programme.

While the latest weekly figures stood at 2.4 million (as opposed to 6.9 million in the end of March), another 2.4 million self-employed and gig workers have enrolled in the special federal programme. These numbers are bounds to grow as more and more states start implementing the new programme. Unemployment claims made during the coronavirus crisis have already exceeded the 37 million claims made over the entire 18 months of the Great Recession.

The unemployment rate skyrocketed from the 50-year lows of 3.5% in February to 14.7% in April with more than 20 million jobs lost in the past month alone. It is likely that more than 40% of these job cuts will be permanent, i.e they might not see a revival once the lockdown is lifted. Nearly half of all US households have lost income since the start of the pandemic and another 37% will do so in the next month. Experts say that this will get much worse before it begins to get better and progress will be slow.

It is clear that the government will no longer risk further damage to the economy by enforcing the lockdown But there is no uncertainty over how effective this lifting of lockdown will be in reviving the economy. Reopening the economy does not necessarily mean hiring will start again, analyst says. While 35 states reopened last week, nine of them actually saw an increase in the number of new workers claiming unemployment benefits.

Wall Street analysts point out that the recovery of the economy and its pace is now largely dependent on government’s economic-stimulus policy and the medical progress in the fight against the novel coronavirus.

Amidst climbing coronavirus cases, Mexico prepares to open the economy

Amidst climbing coronavirus cases, Mexico prepares to open the economy

Even as local government and activists pushed back against the decision, the federal government announced the opening of certain industries.

Guidelines issued overnight by the federal government of Mexico called for the restarting of operations of certain sectors like automotive, mining and construction. Companies would be required to submit health protocols for exiting the virus lockdown which will be approved within 72 hours. The lockdown will remain in place but these sectors have been reclassified as “essential services” by the General Health Council, the country’s top advisory body on the pandemic.

It is believed that the move comes after growing pressure from the neighbouring US to reopen factories that are critical to the supply chains of US-based business, especially in the automotive sector. The sector in the US has started coming back online after a long hiatus, with vehicle assembly plants reopening and suppliers gearing for a ramp-up in production.

But plans to reopen in Mexico have not been met with approval by some politicians and activists who continue to be concerned about the growing pandemic in Latin America, rising national toll and uncertainty about the work conditions waiting for those being sent back to work.

Local governments in the country pushed back against President Andres Manual Lopez Obrador’s call to slowly being online the economy in some 300 townships with no active cases of the coronavirus – called “municipalities of hope. Many states are deciding to not allow any relaxation yet, preferring to wait until June to consider resuming activities.

A newspaper poll showed that 67% of Mexicans believed the pandemic hasn’t peaked yet and the worst was yet to come. Only 20% thought it was over. Meanwhile, Mexico’s coronavirus death toll has crossed 5,300 with over 51,000 cases. Last week, the country reported a record number of 353 COVID-19-related fatalities in a single day and 2,437 new infections in another single day in the same week.

Europe closes its border to curtail virus spread

Europe closes its border to curtail virus spread

In a consolidated move, European leaders announced sealing its borders in order to slow down the spread of coronavirus. EU has put a travel ban on all the non-EU citizens for the period of 30 days for now. If need be the shutdown could be extended.

German Chancellor Angela Merkel told reporters about the ban after a video conference with her European counterparts. Merkel said that the bloc leaders shared common concerns and a “great readiness” to do whatever deemed necessary to prevent the outbreak from destabilising the society any further. The virus has already caused a “very serious” impact on global economy.

Travel ban, an essential requirement as per many epidemiologists, is bound to cause a severe blow to the European economies, which were almost healing from economic slump a few months ago. EU governments have acknowledged that the bloc is heading to a recession this year.

Many nations including US and Japan are acting fast and about to introduce an emergency stimulus package to provide the must need healthcare and economic boost to its people and nation.

In an attempt to mitigate the impact of the deadly virus, several European nations have already imposed curfews and issued notice to close down schools, colleges, shops, bars, and restaurants. The covid-19 pandemic is already spreading at an unthinkable rate in Europe, posing serious challenges towards the continent’s health care system.

EU has taken a clear stand over closing its external borders, the issue of sealing internal borders still stands unclear, though it seems more likeable option. European governments could restrict the travel of European citizens within EU given the fear of virus transmissions from the nationals of different European states.

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Trump proposes $850 billion package to boost economy amid corona pandemic

Trump proposes $850 billion package to boost economy amid corona pandemic

US president Donald Trump has proposed to infuse an emergency package of $850 billion to boost the US economy amid the increasing spread of coronavirus, which has paused businesses and pulled the market down.

The Washington Post reported on Tuesday that out of the total stimulus package, about $50 billion would be issued to the aviation industry, citing two unnamed senior officials in Trump administration. Other industries and businesses ranging from small to medium would also be provided targeted assistance.

The US president, who was being accused of not doing enough and recognising the level of crisis, said for the first time on Monday that the Covid-19 pandemic has pushed the US economy closer to recession.

Mr. Trump said the White House was in discussion with Congress to issue a “substantial” spending bill which would include making immediate cash payments to US citizens in an attempt to pull the economy out of growing whirlpool of recession.

Officially no figure has been given out but The Washington Post reported the amount could reach $850 billion, with a significant bailout plan for airlines.
“We’re going big and that’s the way it’ll be,” Trump told reporters.

US President’s big stimulus announcement has infused the much needed optimism in the market. Wall Street stock market rebounded on Tuesday after witnessing the worst collapse since 1987, on Monday. After facing the economic fall out due to coronavirus, dollar bounced back against the euro on Monday, and oil prices, which had dropped below $30 per barrel, also came up.

The US Treasury Secretary Steven Mnuchin told reporters that the White House will present its massive stimulus plan to Congress, and will push for a quick approval.

Besides, on Monday night, the House passed a separate, revised coronavirus relief bill, which included free coronavirus testing, two weeks of paid sick leave and improved unemployment assistance, among other measures. The Senate would be voting on it by the end of this week.

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Australia stimulates Economy ahead of novel virus spread
Asia Pacific Focus

Australia stimulates Economy ahead of novel virus spread

Working ahead of the outbreak into Australia, the government has decided to pump in to the tune of A$17.6 billion ($11.4 billion) into the economy to try to stop the coronavirus outbreak triggering a recession in the economy, sources have confirmed.

Random cases of an infection spreading in have been reported in Australia, including prominent and veteran actor Tom Hanks along with is spouse Rita Wilson. He and his wife were traveling in Australia when they were tested after exhibiting symptoms like tiredness, body aches, chills and “slight fevers.”

Travel restrictions following a formal pandemic declaration has also been put into place. Most nations are facing financial crises of proportions they have not faced in a decade. These include Italy, Iran, America and now Australia as well.

The country’s first stimulus package was given in 2008 when Australia faced a global financial crisis. That had then helped Australia avert a recession then. Political analysts are right in understanding that the Australian government can go to great lengths to pare the economic impact of this current struggle.

Unlike other nations which had only acted upon cushioning their respective economies, Australia has been wise. They have decided to pump in the stimulus package even though infected cases are only risen to 130 people, with three confirmed deaths. Economists now expect the outbreak, classified as a pandemic by the World Health Organisation, to cause a recession in the second quarter.

According to confirmed news shared with the media, Prime Minister Scott Morrison has said, “the package will subsidize the wages of 120,000 apprentices, offer one-off cash payments for welfare recipients and give up to A$25,000 ($16,160) to small businesses.”

This stimulus will also support more than 6 million welfare recipients, notably pensioners and unemployed citizens will get one-off cash payment of A$750. It is also confirmed that most of the package would be spent immediately, potentially boosting the economy by 1.5 percentage points in the second quarter.

Speaking to the Wall Street Journal over this move, Craig James, chief economist, Commonwealth Bank of Australia has said, “The package won’t super-charge the economy. Neither does it guarantee that the economy won’t slip into recession. But it is a good first step.”

Australia has not experienced a recession, defined as two consecutive quarters of economic contraction, since the early 1990s.

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