The number of people filing new claims for unemployment benefits rose last week by 12,000 to a seasonally adjusted 472,000, according to the Labor Department report. Continued job losses seem to be one of the biggest concerns of economists who have been hoping that 2010 would mean a financial recovery. But the reality has been much bleaker. There are about 4.57 million Americans receiving ongoing unemployment insurance benefits and that does not include the 5.2 million Americans receiving unemployment insurance benefits under an emergency extension plan funded by the federal government. So in reality we have nearly 10 million Americans officially unemployed, in other words they are official because they can receive benefits and we’re are not counting all of those who have no job yet cannot receive benefits. This astronomically high unemployment figure has far reaching ramifications for the greater economy and for those who are currently unemployed.
Already, many businesses are facing bankruptcy because revenues have dropped due to shaky consumer confidence. Many Americans are afraid of facing a job loss so they are pulling back on spending. On the other hand, many businesses are scaling back on employee benefits and salaries citing the frail economy and thereby creating a domino effect which further decreases consumer participation in the economy. As more Americans lose their jobs, face reduced salaries and mounting debts, many more of them will be forced into bankruptcy. They will choose bankruptcy to save their homes from foreclosure or choose bankruptcy to avoid wage garnishments when they are unable to pay on their credit card bills and other unsecured debts. Eventually millions of Americans will time out of the unemployment benefits system because we cannot fund the extension forever. Those Americans will have no income and will have no other choice but to at least consider their bankruptcy options if they want to survive.