Washington: The US Federal Reserve said the COVID-19 pandemic has led to an alarming surge in job losses, “with the unemployment rate, which had been at a 50-year low, soaring to a post-World War II record high”.
The central bank’s remarks were part of its Monetary Policy Report submitted to Congress on Friday, reports Xinhua news agency.
Unemployement rate jumps
Since February, employers have shed nearly 20 million jobs from payrolls, reversing almost 10 years of job gains, the Fed said in the report, noting that the unemployment rate jumped to a post-World War II high of 14.7 per cent in April and then moved down to a still very elevated 13.3 per cent in May.
In a virtual press conference on Wednesday, Fed Chairman Jerome Powell pointed out this figure “likely understates the extent of unemployment”, as was stressed by the Bureau of Labor Statistics.
“Accounting for the unusually large number of workers who reported themselves as employed but absent from their jobs would raise the unemployment rate by about 3 percentage points,” Powell said.
The central bank chief voiced his concern that millions of Americans could be permanently unemployed from this crisis, adding that the US economy will likely need more fiscal and monetary support for a long time.
The Fed also noted in the report that the most severe job losses have been sustained by those with lower earnings and by the socio-economic groups that are “disproportionately” represented among low-wage jobs.
The number of initial jobless claims in the US totalled 1.54 million last week as reopening efforts continued across the nation, the Labour Department reported on Thursday.
Over 44 mn initial jobless claims filed
With the latest numbers, over 44 million initial jobless claims have been filed over the past 12 weeks as COVID-19-induced recession sent ripples through the US labour market, indicating the mounting economic fallout of the outbreak.
The Fed on Wednesday kept its benchmark interest rate unchanged at the record-low level of near zero, and projected interest rates to remain at the current level through at least 2022.
It projected that the US economy will shrink by 6.5 per cent in 2020, followed by a 5 per cent gain next year.
According to the central bank’s economic projection, the unemployment rate could fall to 9.3 per cent in the fourth quarter of this year, before reaching 6.5 per cent by the end of next year.
As of Saturday, the US continued with the world’s highest number of confirmed COVID-19 cases and deaths at 2,046,643 and 114,672, respectively, according to the Johns Hopkins University.