US Labor Market Shatters Post World War 2 Records as Coronavirus Lockdowns Bite

The U.S. economy lost a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression and the starkest sign yet of how the novel coronavirus pandemic is battering the world’s biggest economy.

The Labor Department’s closely watched monthly employment report on Friday also showed the unemployment rate surging to 14.7% last month, shattering the post-World War Two record of 10.8% touched in November 1982. It strengthened analysts’ views of a slow recovery from the recession caused by lockdowns imposed by states and local governments in mid-March to curb the spread of COVID-19, the respiratory illness caused by the virus.

The economic crisis spells trouble for President Donald Trump’s bid for a second term in the White House in November’s election. After the Trump administration was criticized for its initial reaction to the pandemic, Trump is eager to reopen the economy, despite a continued rise in COVID-19 infections and dire projections of deaths.

“If there is a silver-lining in today’s dismal jobs report, it is in the realization that the economy cannot possibly get any worse than it is right now,” said Chris Rupkey, chief economist at MUFG in New York. “Joblessness can only diminish from this point forward as many states start reopening.”

Economists polled by Reuters had forecast nonfarm payrolls diving by 22 million. Data for March was revised to show 870,000 jobs lost instead of 701,000 as previously reported. A record streak of job growth dating to October 2010 ended in March.

The jaw-dropping job losses in the last two months pushed nonfarm employment to its lowest level since February 2011. Job losses were almost across the board, with leisure and hospitality industry payrolls plunging 7.7 million. Restaurants and bars accounted for nearly three-quarters of the decline.

Ironically, healthcare employment declined by 1.4 million jobs, with decreases at offices of dentists, doctors, other health practitioners and hospitals.

Dentists have closed offices, while general practitioners and hospitals have seen a reduction in patient visits as people stay at home in fear of contracting the highly contagious virus. Hospitals have also suspended elective surgeries to focus on the treatment of COVID-19 patients.

Stocks on Wall Street were trading higher on easing tensions between the United States and China. The dollar was little changed against a basket of currencies, while U.S. Treasury prices were trading lower.

MILLIONS UNEMPLOYED

Though the unemployment rate jumped from 4.4% in March, its ascent was blunted by the drop of 6.432 million from the labor force. Some of the people who lost their jobs but are unable to look for work because of the coronavirus are not counted as unemployed. According to the Labor Department’s Bureau of Labor Statistics, which compiles the employment report, a person has to be looking for work and available to do it to be considered unemployed.

The labor force participation rate, the proportion of working-age Americans who have a job or are looking for one, dropped 2.5 percentage points to 60.2% in April, the lowest rate since January 1973. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, surged to 22.8% last month from 8.7% in March.

The employment-to-population ratio, which is viewed as a better measure of an economy’s ability to create employment, tumbled 8.7 percentage points to 51.3%, the lowest rate since the series started in 1948. Unemployment rose for all demographic groups last month.

With the mandated business shutdowns hitting workers hard in the lower-wage leisure and hospitality industry, average hourly earnings shot up 4.7% in April from 0.5% in the prior month. That boosted the annual increase in wages to 7.9% April. The workweek averaged 34.2 hours last month.

Though millions of Americans continue to file claims for unemployment benefits, April could mark the trough in job losses. More small businesses are accessing their portion of an almost $3 trillion fiscal package, which made provisions for them to get loans that could be partially forgiven if they were used for employee salaries.

The Federal Reserve has also thrown businesses credit lifelines and many states are also partially reopening.

Companies like Walmart and Amazon are hiring workers to meet huge demand in online shopping. Truck drivers are also in demand, while supermarkets, pharmacies and courier companies need workers. Still, economists do not expect a quick rebound in the labor market.

“Given the expected shift in consumer behavior reflecting insecurities regarding health, wealth, income, and employment, many of these firms will not reopen or, if they do reopen, hire fewer people,” said Steve Blitz, chief economist at TS Lombard in New York. “This is one reason why we see the underlying recession extending through the third quarter.”

Economists say the economy entered recession in late March, when nearly the whole country went into COVID-19 lockdowns.

The National Bureau of Economic Research, the private research institute regarded as the arbiter of U.S. recessions, does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

Responses

  1. Hey EVERYBODY, look on the bright side. I live an hour from The City(San Francisco). I’m makin 3 or 4 trips there on Saturday AND Sunday. FREE booze and weed. They CAN’T prove I’m NOT homeless.
    Have you EVER SEEN anything this stupid. Free high’s on the state. Just where is contusion with his fascism crap where it’s REALLY happening. SF will find a way to get their votes counted for the dims, too.

  2. Time to open up, time that healthy people go back to work. We older people with compromised immune systems can take care of ourselves and stay inside. So many doctors have said that being inside is the cause of the spread.

  3. While the DemocRAT news media brothers keep putting the blame on the virus as the reason for the Nation being shut down, NOTHING could be further from the truth. The virus did NOT shut the Nation down and put people out of work. Those Leftists who refused to look at the past records of seasonal flu and virus epidemic numbers – which NEVER had ANY shut downs – went about to politicize and use the Chinese flu in an attempt to try and reverse the 2016 election when they were unable to accomplish that with their 3 1/2 years of phony, groundless investigations and unsubstantiated impeachment efforts (by D’RAT Schiff and his merry band of liars) of President Trump and his Administration. The kung flu was only an expedient means to try and get rid of this President and influence the upcoming 2020 election. There was NO reason for this Nation to EVER be shut down!

  4. The trumpukelican ass kissing, sycophantic premature re-openings can and will make the entire picture, health and economy wise, much much worse.
    You simply cannot fix stupid !

    1. As a DemocRAT, you understand and know from experience you can’t fix stupid. However, digest a few numbers (or have someone draw you some pictures with your crayons).

      Florida has 21 Million people. Opened up the beaches, some stores, industries and restaurants; eateries which will be expanded to sidewalk tables on Monday. Deaths from COVID-19 (that’s the Chinese flu to the uneducated): just over 1,600 STATEWIDE.

      New York State has 19 million residents (that’s 2 million FEWER than Florida for those without math skills). Everyone still in their rat holes (basements) in their jammies with their bottles of Pablum. Deaths from COVID-19 there: OVER 26,000. Have someone with a brain to do the math.

      Amazing what fresh air and sunshine will do for the body. Would be beneficial to even an uneducated, 2nd grade, thick headed moron holed up like a wussy.

      1. Were you born with your head up your ass or is a new labor of love Jim ?

Comments are closed.