Thursday , October 22 2020
The number of permanent unemployed in the U.S. climbs to 3.8 million
The number of permanent unemployed in the U.S. climbs to 3.8 million

The number of permanent unemployed in the U.S. climbs to 3.8 million

Recently, the unemployment rate in the United States has been declining, giving people a feeling that the US economy is recovering. According to data released by the U.S. Department of Labor on October 2, the U.S. unemployment rate fell 0.5 percentage points from the previous month to 7.9% in September, a five-month decline. But this may be an illusion and an illusion. Various signs show that the US economic situation is still getting worse.

The number of permanent unemployed climbed to 3.8 million, and companies such as Disney and KPMG announced layoffs in the United States.

With the continuing epidemic hitting the US economy, the number of permanent unemployed persons in the United States has continued to increase. This number increased by 345,000 in September, bringing the total permanent population to the highest point in seven years-3.8 million. Starting from February this year, this key job market indicator has nearly doubled. The report pointed out that with the closure of enterprises and the need to reduce costs, many people considered temporary unemployment have become permanent unemployment.

In addition, although the unemployment rate in the United States has continued to decline in recent months, it is still much higher than the level before the epidemic. It is worth noting that the initial wave of recruitment after companies resumed work is dissipating as the pace of relaxation of epidemic prevention and control measures in various states in the United States has gradually slowed. This means that employment growth in the United States is cooling, and there is still a long way to go before the labor market returns to the level before the epidemic.

The number of permanent unemployed in the U.S. climbs to 3.8 million

To make matters worse, the number of new applications for unemployment benefits in the United States each week is still high, indicating that the rate of corporate layoffs has not slowed down significantly. In particular, large companies in the United States have recently launched a new round of layoffs.

On September 30, many giant companies in the United States announced plans for large-scale layoffs. Among them, Disney said that due to the long-term closure of California theme parks, Disney will lay off 28,000 employees in the experience and consumer products department. Allstate Insurance, the fourth largest auto insurance company in the United States, announced that it plans to cut about 3,800 jobs, equivalent to nearly 8% of its total number of employees. As one of the four major international accounting firms, KPMG announced that it will lay off 1,400 of its 35,000 US employees.

The U.S. energy industry, which had suffered heavy losses before, has become more and more layoffs. Royal Dutch Shell announced that it plans to lay off 7,000 to 9,000 employees by the end of 2022. Marathon Petroleum, the second-largest refining company in the United States, also said recently that it will lay off more than 2,000 employees within the company, and it has already laid off 800 employees.

The economic situation is pessimistic, and US corporate bonds have been suddenly sold on a large scale.

U.S. industry insiders believe that as more companies announce closures and layoffs, the economic trauma in the United States may become more obvious in the fourth quarter.

Meister, chairman of the Federal Reserve Bank of Cleveland in the United States, said that the recovery of the US labor market has been slow. With company layoffs and workers retraining for new positions, it may take two to three years for the unemployment rate to return to its low level in February this year. Neal Kashkari, chairman of the Minneapolis Federal Reserve Bank of the United States, said that if Congress fails to introduce more fiscal stimulus measures, the road to a full recovery of the US economy will be longer.

The number of permanent unemployed in the U.S. climbs to 3.8 million

Moreover, the economic recovery of the United States faces many challenges. Jamie Dimon, CEO of JPMorgan Chase, the largest bank in the United States, believes that the recovery of the US economy from the recession caused by the epidemic may be interrupted by the lack of more stimulus policies, election uncertainty, and the second wave of the epidemic. All signs indicate that the United States is facing a complex economic dilemma.

This negative expectation is gradually undermining investors’ confidence in the investment market, causing the U.S. capital market to face huge turmoil risks. There may also be undesirable market effects, such as the recent sharp sell-off in the corporate bond market.

According to data from EPFR Global, a global investment analysis agency, in the week ending September 23, investors withdrew US$4.86 billion from US high-yield bonds/junk bonds. The scale is second only to the $5.6 billion that was withdrawn during the worst period of the epidemic in mid-March.

Data from the Intercontinental Exchange Data Service also showed that the average yield of US high-yield bonds rose by more than 0.5 percentage points in September to 5.83% on September 23, the highest level in two months. It reflects that investors are selling high-risk corporate bonds.

National Alliance Securities, a US asset management agency, believes that the US high-yield corporate bond market has lit a “red light” and it is expected that risk-averse investment behavior will further increase market volatility.

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