The Labor Department in the United States reported today, Thursday May 27, that another 2.1 million unemployment claims were filed last week, resulting in a total of more than 40 million people newly unemployed in that nation.
One out of every four American workers has been separated from their job since mid-March when the spreading corona virus prompted stay at home containment strategies.
The numbers are the highest seen historically, although this week the Labor Department reported numbers are below that of the peak period when 6.9 million Americans filed for unemployment benefits.
The US Congress has approved jobless benefits that include freelancers, self-employed and gig workers.
Analysts, meanwhile, are projecting that some of these jobs, especially those provided by small businesses, may never return. While many states in the Union are slowly re-opening, an economic ‘bounce’ is not expected because of dampened consumer demand.
Analysts at citivelocity.com say many small and medium-sized businesses, with little cash and fixed costs, will close permanently.
The analysts are expecting spending habits to change post-COVID. At the same time, they are expecting e-commerce, including online grocery shopping to increase.
The analysts say they expect permanent change in categories such as travel, entertainment, sports, and retail in terms of reduced demand.
Analysts at voxeu.org state that if multiple waves of the COVID-19 virus should occur and lockdowns continue for longer, the recession might become more prolonged, as opposed to a V-shaped recovery.
The marginal propensity to consume may fall, as higher unemployment risk may further increase preferences for precautionary savings, they project.
Consumers are saving more, and, while in the short run increased government spending is making up for this, it is expected that risk aversion among consumers will persist for some time.