In the week ending May 23, initial jobless claims in the United States increased by 2.1 million. Since the outbreak of the coronavirus pandemic, more than 40 million people have lost their jobs – at least temporarily. The consumption-dependent US economy is suffering from the huge army of unemployed people.
A massive drop in gross domestic product in the second quarter has already been set in stone. Although the containment measures are now being relaxed in the USA, there can be no question of normalcy for the time being. Even if things go faster in the coming weeks, there remains a deep crisis of confidence. Uncertainty about the further course of the virus and concerns about one’s own health will dampen the mood of consumption. China is currently experiencing this. Despite overcoming the first strong wave of infections, consumers in the Middle Kingdom remain cautious.
The economy is in a vicious circle. Less consumption means less sales and that means less employment. In turn, less employment means less consumption. Even if, as a result of the easing, the first applications for unemployment benefits decrease and jobs are created again, the base unemployment will be higher. In the meantime, it does not seem to worry about all of this on the stock markets. While sadness prevails in many families in view of job losses, celebrations take place on the stock exchanges.
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