West facing frighteningly high unemployment due to pandemic

The coronavirus pandemic hit the world's labor market, and especially the US economy

The coronavirus pandemic hit the world's labor market, and especially the US economy, RISS expert Vyacheslav Kholodkov pointed out. The quarantine lockdown has a great impact on the service sector. “The mood of Americans today is very pessimistic as a significant part of the US GDP is dedicated to the service sector,” he added.

Bank of America is expecting the US GDP to shrink 12 % in the second quarter; the Federal Reserve Bank of St. Louis further darkens this gloomy picture and predicts the country’s GDP to fall by 50 %. In the worst case, the outbreak may leave 30 % of Americans jobless (about 50 million people). According to a more favorable assessment of Treasury Secretary Steven Mnuchin, the unemployment rate may rise by 20%, which means that it will affect 35 million people.

The coronavirus has already striken a deadly blow at the entertainment industry, transport, hotel business, and retail trade. Many small and medium-sized enterprises operate in these industries. If these businesses don't survive the crisis, millions of Americans will lose their jobs.

RISS expert positively assessed the US financial aid program for low-income citizens who have lost their jobs during the pandemic. “Under the program people can receive about $ 1200 for each person and $ 500 as a child benefit. This money will stimulate the growth of consumer goods production,” the analyst believes.

Kholodkov recalled that the European economy had also been severely hit by the epidemic. There are about one million unemployment people there. Many economists believe that soon the number of unemployed in Europe will exceed all forecasts and amount to 3-4 million people. Small and medium-sized businesses will go bankrupt as they do not have the opportunity to take a new loan and wait out the crisis.

China holds the most profitable position now, Kholodkov underscores. “The fact is that China's economy differs from the Western economy. Most of the people are employed in manufacturing there. And the manufacturing sector has been growing at a steady pace in the last years. The most important thing is that the Chinese leadership helps small and medium-sized enterprises. In February, it allocated them about $ 170 billion. The Chinese leadership proved its effectiveness of control measures during the epidemic. Against the backdrop of the economic crisis in the United States and Europe, the Chinese economy will most likely soar sky-high,” he concluded.

coronavirus economy