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Ranks of workers receiving unemployment insurance grows in January

By Masao Suzuki

Gross Domestic Product weaker than expected

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San José, CA – The broadest measure of unemployment insurance, which includes the regular state unemployment insurance or UI, the federal Pandemic Unemployment Assistance or PUA, the federal Pandemic Emergency Unemployment Compensation or PEUC, as well as the state Extended Benefits or EB rose in the first week of January by 2.3 million people to a total of 18.3 million people. While down from its peak in April, it is still nine times as high as it was a year ago before the recession began, according to the weekly report by the U.S. Department of Labor released on Thursday, January 28.

Part of the bounce in unemployment insurance benefits was because of the temporary end to the federal PUA and PEUC at the end of 2020 as Republicans in the Senate dragged their feet on passing more badly needed aid. The other is the renewed weakness in the economy, as seen in the 140,000 jobs lost in December, the first job loss since April.

This weakness in the economy at the end of the year could also be seen in the first report on the Gross Domestic Product, or GDP, for the fourth quarter, or last three months of the year, which was also released January 28 by the Bureau of Economic Analysis or BEA, which is part of the U.S. Department of Commerce. In the October to December period of 2020, the U.S. economy grew by 1%, which was less than what economists expected.

This meant that the U.S. economy shrank by 3.5% in 2020, the worst showing since 1946 when the economy fell with the end of World War II. While most sectors of the economy grew, although at a much slower pace than in the third quarter or July to September period, state and local government spending fell for the third quarter in the row, the only sector not have a rebound in the second half of the year.

The economic damage of the recession and the pandemic was actually worse in almost all other major capitalist economies, with the United Kingdom the worst with an estimated 8.5% drop in their GDP in 2020. The only exception was South Korea, whose better control of the COVID-19 pandemic and large economic ties with China reduced their economy’s fall to only 1%.

In contrast, the Chinese economy actually grew 2.3%, despite being the first country with a major COVID-19 outbreak. China’s socialist system and its “zero tolerance” policy toward the virus allowed it to suppress the pandemic and have an economy rebound. Socialist Vietnam, which was able to prevent the virus from getting a foothold, did even better, with a 2.9% rate of growth in 2020.

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