6.6 million more workers apply for unemployment

The COVID-19 outbreak continues to impact businesses and employees, reflected in the increasing levels of unemployment applications; more help may be on its way.

Posted April 10, 2020

In the week ending April 4, 6,606,000 more unemployment applications were initiated, up 187,538 from the previous week. The unemployment rate was 5.1 percent as of March 28, up 3.0 percentage points. To put the numbers into perspective, on March 14, there were 282,000 initial claims, which was only a little above the normal amount.

The new initial claims of 6.6 million is actually down from the previous week’s number of initial claims, which was over 6.8 million, but in about three weeks, over 16 million workers have lost jobs — about 10 percent of the workforce.

In light of this, on April 8, the Federal Reserve took additional actions to provide up to $2.3 trillion in loans to support the economy. The funding is intended to assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.

The Federal Reserve actions are designed to support employers of all sizes and communities across the country by taking the following steps:

  • Bolstering the effectiveness of the Small Business Administration's (SBA) Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses. The PPP provides loans to small businesses so that they can keep their workers on the payroll. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value.
  • Ensuring credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans through the Main Street Lending Program. The Department of the Treasury, using funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will provide $75 billion in equity to the facility.
  • Increasing the flow of credit to households and businesses through capital markets, by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF). These three programs will now support up to $850 billion in credit backed by $85 billion in credit protection provided by the Treasury.
  • Helping state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities. The Treasury will provide $35 billion of credit protection to the Federal Reserve for the Municipal Liquidity Facility using funds appropriated by the CARES Act.

Federal lawmakers continue to be pressured to come up with more economic stimulus and relief. In just a few days, the new program became overwhelmingly popular. Billions of dollars have been provided and more is in the pipeline to help save jobs. But members of Congress indicate that more funding is needed, or the program may run dry.

This article was written by Darlene Clabault of J. J. Keller & Associates, Inc.

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