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Unemployment rising in US as bankruptcy threats increase

By Paul Dennis

24 July

The US government is yet to decide on the whether to continue the federal Paycheck Protection Program.

Lack of aid from the government may push companies into bankruptcy and increase unemployment rates, macroeconomic influencers share their views on the Covid -19 impact.

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on an expected surge in bankruptcy cases in the US due to the Covid-19 pandemic.

Decline in consumer demand, social distancing rules and lack of government support is hurting the operations of small and medium businesses.

More than 3,400 companies filed for Chapter 11 bankruptcy protection during the first half of the year, with economists warning of more to come once the federal Paycheck Protection Program aid ends.

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A Goldman Sachs survey among more than 1,100 businesses has found that 84% of them will not have sufficient cash flow to keep operations going.

Meanwhile, Heather Long, economics correspondent at Washington Post, tweeted about unemployment statistics in the US.

She added that 1.4 million new unemployment aid applications were filed during the last week of July, which is an increase of 109,000 from the previous week.

Long noted the surge in the number of unemployment applications filed is an indication that layoffs are on the rise.

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