WASHINGTON, May 9 (NNN-XINHUA) – New data showed that U.S. employers cut a staggering 20.5 million jobs in Apr, erasing a decade of job gains since the global financial crisis and pushing the unemployment rate to a record 14.7 percent.
While this marks the highest level of unemployment since the Great Depression, analysts said, the figure does not capture the full scale of the COVID-19-induced job crisis, and the worst is yet to come.
In Apr, the unemployment rate surged by 10.3 percentage points to 14.7 percent, the largest over-the-month increase in the history of the series dating back to Jan, 1948, the U.S. Bureau of Labour Statistics reported.
“As tragic as this number is, it comes as little surprise, as more than 26 million individuals had filed for unemployment benefits, between the Mar employment survey and the Apr survey,” Jay H. Bryson, acting chief economist at Wells Fargo Securities, wrote in an analysis.
Since mid-Mar, numerous U.S. states have rolled out “stay-at-home” policies and shut down nonessential businesses, in a bid to slow the spread of the virus, leading companies to cut millions of jobs in weeks.
Employment in leisure and hospitality plummeted by 7.7 million, or 47 percent, the report showed. Almost three-quarters of the decrease, or 5.5 million, occurred in food services and drinking places.
The manufacturing sector shed 1.3 million workers, and employment in retail trade was down 2.1 million jobs. The education and health sector, which is a reliable job creator during “normal” times, lost 2.5 million jobs, Bryson noted.
Government employment also dropped by 980,000 in Apr, according to the bureau. Employment in local government was down by 801,000, in part reflecting school closures.
“Today’s devastating jobs report confirms that the labour market is in free fall, undoing years of economic progress,” said Shai Akabas, director of economic policy, at the Bipartisan Policy Centre. “Unfortunately, we already know it gets worse from here.”
“The unemployment rate would have jumped even higher had not 6.4 million individuals left the labour force,” Bryson said.
Considering these factors, Chicago Fed economists, Jason Faberman and Aastha Rajan, said this week that, the official data for Apr could vastly understate job destruction from the pandemic.
As the U.S. economy witnesses its biggest slump since the global financial crisis, with 33 million jobless claims filed within seven weeks, the potential economic recovery, following the reopening could be welcoming news for many.
According to a recent projection from the Wharton School of the University of Pennsylvania, partially reopening would increase GDP on June 30 by one percent year-on-year, to a 10.7 percent contraction. About 4.4 million jobs would be saved, though 14 million jobs will still be lost between May 1 and June 30.
White House economic adviser, Kevin Hassett, recently said that every U.S. state will mostly reopen by the end of May, and most forecasters predict an economic rebound in the second half of the year.
President Donald Trump, said that, with the reopening of the economy, lost jobs will come back. “Those jobs will all be back, and they’ll be back very soon,” the president said.
Economists, however, seem to believe otherwise. Michael Hicks, director of the Centre for Business and Economic Research, at Ball State University in Indiana, said, “The bulk of job losses fall in sectors which will continue to suffer low demand, after shelter in place orders have been loosened.”
“Regardless of state action to relax shelter in place rules, the economy will continue to experience Great Depression levels of stress until COVID-19 vaccinations or treatments are available,” Hicks said.
Hicks, however, said the good news is that, of the 20.5 million workers unemployed over the month, 18 million reported they were experiencing a temporary layoff. “This signals the expectation that they may regain their jobs as conditions improve,” Hicks said.
According to Bryson, the unemployment rate “will still be in excess of six percent at the end of next year.”
Analysts say, it could take years to return to the historically low 3.5 percent unemployment rate, the country experienced before the COVID-19 outbreak. Since Sept last year, the unemployment rate had been hovering around 3.5 percent to 3.6 percent until Feb.– NNN- XINHUA
