Hot topics | Coronavirus pandemic

Bloomberg Experts Predicted High Unemployment In The U.S.

Bloomberg Experts Predicted High Unemployment In The U.S.

The US economy is expected to show the largest decline in history in the current quarter, while unemployment will reach a record level for all time since the end of The Great Depression, followed by a moderate and prolonged recovery, Bloomberg reports.

According to the consensus forecast of 69 economists surveyed by the Agency, US GDP in April-June will fall by 25% in annual terms after a less deep contraction in the first quarter, and the unemployment rate will rise to 12.6%, the highest since the 1940s.

The drop in GDP is likely to be regarded by the U.S. National Bureau of economic research as the first recession since 2007-2009, Bloomberg notes. Economic growth is forecast to resume in the second half of the year, but economists warn that it will not be rapid. The Federal Reserve is expected to hold interest rates near zero until the first half of 2022.

"Even if the economy starts to recover in mid-May, more than 20 million Americans will be out of work by this time, with the drop in GDP from the peak to the potential bottom likely to be about 13%, which is more than three times deeper than during the global financial crisis," notes ING Financial Markets economist James Knightley.

According to him, this will be a "gradual recovery of the economy", and it will take more than one month before the situation returns to normal.

Unemployment is forecast to gradually decline after peaking in the second quarter, but its level in the last three months of 2020 will be at least 8.1%. In 2022, unemployment is expected to be 5.4%.

The Bloomberg survey was conducted between April 3 and 10, when data on the number of new applications for unemployment benefits in the United States was published.

Over the past three weeks, the number of applications for unemployment benefits in the US has soared by almost 16.8 million. For comparison, in the twelve months to mid-March, the total number of applications submitted was only 11.5 million. Unemployment jumped to 4.4% in March, the highest in more than 2.5 years.