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Goldman Sachs predicts record unemployment rise

By Lawrence Gash

Covid-19 crisis takes its toll on US workers

Goldman Sachs (GS) has predicted that as a result of the economic impact of the coronavirus outbreak, this week will see the largest number of Americans filing for their first week of unemployment benefits on record.

A government report published on Thursday found that 281,000 Americans registered for their first round of unemployment benefits last week, a 33 per cent rise on the week before and the largest percentage jump since 1992.

According to one of Wall Streets leading financial firms however, this weeks figures will soon dwarf this, with 2.25 million Americans expected to file for support – an eightfold increase.

The Covid-19 virus has triggered the largest worldwide economic and financial crisis since 2008, wiping $25 trillion (£21tn, €23tn) in value off global markets. Following some of the S&P’s worst days on record and Wall Street’s go-to fear gauge, the VIX, hitting new heights, the median US stock has now fallen by 50 per cent.

Earlier this week Goldman Sachs forecast the US economy to slump in Q1, contract by 5 per cent in Q2 but rebound strongly with 3 per cent growth in Q3 and 4 per cent in Q4. However, on Friday afternoon the bank revised its Q2 prediction from -5 per cent to -24 per cent.

Having planned to base most of his reelection campaign on his administration’s hitherto impressive job creation record, the US president Donald Trump will hope that Goldman's earlier prediction is closer to reality.

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