The U.S. economy likely lost a staggering 22 million jobs in April, in what would be 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, Reuters reports.
A report that is closely watched in any given month but especially so now with non-essential businesses in mandatory shutdowns nationwide to contain the coronavirus, the Labor Department’s monthly employment report on Friday is also expected to show the jobless rate surging to at least 16% last month. That would shatter the post-World War Two record of 10.8% touched in November 1982.
The numbers will likely strengthen analysts’ expectations of a slow recovery from the recession caused by the pandemic. It would add to a pile of bleak data on consumer spending, business investment, trade, productivity and the housing market in underscoring the devastation unleashed by lockdowns imposed by states and local governments in mid-March to slow 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.
“Our economy is on life support now,” said Erica Groshen, a former commissioner of the Labor Department’s Bureau of Labor Statistics. “We will be testing the waters in the next few months to see if it can emerge safely from our policy-induced coma,” added Groshen, who is now a senior extension faculty member at the Cornell University School of Industrial and Labor Relations.
The historic dive in April nonfarm payrolls predicted in a Reuters survey anticipates job losses in nearly all sectors of the economy, with larger layoffs in the leisure and hospitality industry – mainly restaurants and bars. It would follow the shedding of 701,000 jobs in March, which ended a record streak of employment gains dating to October 2010.
Estimates in the survey ranged to as much as a loss of 35 million. Forecasts for April’s unemployment rate, which was at 4.4% in March, were as high as 22%.
There is great uncertainty surrounding last month’s estimates because of the nature and speed of the job losses.
A total of 26.5 million people had filed claims for jobless benefits and 16.2 million were on unemployment rolls through the week of April 12, when the government canvassed establishments and households for payrolls and the unemployment rate.
Eligibility for unemployment benefits has been greatly expanded to include contractors and gig workers among others, overwhelming local employment offices with applications and leading to backlogs, Reuters adds.
Economists believe the numbers of people applying for unemployment aid and those continuing to receive benefits are understated. Meanwhile, some people might be filing more than one claim, and workers whose hours have been cut because of COVID-19 can also seek unemployment benefits.