Only two months ago, the U.S unemployment rate was at a 50-year low of 3,5 percent and the U.S economy was great with a growth much higher than the rest of the world. But now, everything have changed. It`s all turned upside down.
The U.S unemployment rate jumped to 14,7 percent in April 2020 and that is the highest unemployment rate in the U.S history. This is terrible. This is ugly and the worst we have seen as the Coronavirus pushed millions out of work.
The number of unemployed persons rose by 15,9 million to 23,1 million in April. The labor force participation rate decreased by 2,5 percentage points over the month to 60,2 percent which is the lowest rate since January 1973.
The U.S economy is likely to shed a record 22 million jobs in April, which would be the biggest drop in payrolls since the Great depression!
The coronavirus pandemic ended an historic 113 straight months of employment growth. It was the first decline in payrolls since September of 2010 but the figures were not as bad as those seen in 2008 as the number excluded the last two weeks of March when unemployment claims surged by nearly 10 million. About two-thirds of job loses occured in leisure and hospitality, mainly in food services and drinking places.
It took over ten years to push down the unemployment rate from about 10 to just 3,5 percent, but it took only weeks to push it back to a record 14,7 percent.
Europe is in trouble. The growth is plummeting. The Euro area «is facing an economic contraction of a magnitude and speed that are unprecedented in peacetime», the ECB president Christine Lagarde said on a news conference in Frankfurt, Germany earlier today.
The Eurozone economy shrank by 3,8 percent on quarter in Q1, and that was the steepest contraction since comparable records began in 1995 as a coronavirus lockdown from mid-March forced businesses to close and consumers to stay at home.
And this is just the beginning. Ms Lagarde suggested euro area GDP could fall by between 5 and 12 percent this year. I repeat: 12 percent!
Not only the euro area came out with the GDP news today. France came out with their bad news today. The French economy shrank 5,8 percent on quarter in the three months to March 2020. And you know what; they are entering a technical recession. I repeat; recession!
This is ugly. This is the steepest decline in GDP on record, as the Covid-19 outbreaks stopped the economy. Household consuption plummeted -6,1 percent, led by falls in spending on both goods and service, fixed investment; -11,8 percent. Foreign demand contributed negatively as both exports and imports fell.
Italy is also in a technical recession. Italy`s GDP shrank 4,7 percent on quarter in the three months to March of 2020. It was the steepest contraction since comparable records began in 1995, as the country was severely hurt by the coronavirus pandemic during March.
The domestic and external demand contributed negatively to the GDP in Italy.
Spain is in the same club. Their economy shrank 5,2 percent on quarter in the first three months of 2020. That is the steepest contraction since the series began in 1995, as the Covid-19 pandemic forced the government to impose lockdown measures in mid-March.
Years of economic growth is wiped out at a pace never seen before. Not only in Europe but also in the United States. The unemployment rate go straight up and the personal spending go straight down.
Personal spending in the US dropped 7,5 percent month-over-month in March 2020, and that was the largest decline in personal spending on record, as the coronavirus crisis hit households’ demand.
Within services, the leading contributor to the decrease was spending on health care.
What`s interesting to see is that France has the highest personal income tax rate in Europe, which is 45 percent. At the same time they have a very high unemployment rate; 8,1 percent. Not only that; their Dept to GDP is 98,10 percent.
Unemployment rate in Italy is 8,4. Personal income tax rate is 43 percent. Both very similar to France, but Italy`s Debt to GDP is 134,8 percent.
Government Debt to GDP in Spain is 95,5 percent with an unemployment rate of 14,41 percent. Personal income tax rate is similar to France and Italy; 45 percent.
France, Italy and Spain has also a lot of problems with the coronavirus. They are all on top of the debt burden list, but they are also on top when it comes to covid-19.
It seems like it is a correlation between debt, high unemployment rate, personal tax income and coronavirus deaths. In comparison; the US debt to GDP is 107 percent as of December 2019. Experts say it will be worse.
To contact the author of this story: Ket Garden at email@example.com