WASHINGTON: Fresh data has revealed that nearly all of the jobs created in the US economy in the last decade have been wiped out in a single month as 33.5 million workers filed for unemployment benefits.
That shocking job losses figure, along with a historic surge in the unemployment rate, is expected to be confirmed in the Labor Department’s monthly employment report for April — the first full month of the lockdowns.
The US is home to the world’s largest and deadliest coronavirus outbreak, with more than 75,000 fatalities and 1.2 million cases reported as of Thursday, according to Johns Hopkins University.
And the economic damage has been swift and stunning.
It will be the “largest collapse in history,” Roiana Reid of Berenberg Capital Markets said in an analysis of the April employment report.
In the two years of the 2008 global financial crisis, the world’s largest economy lost 8.6 million jobs. During the recovery, from February 2010 to February 2020, 23 million positions were created.
Reid is projecting 21 million job losses last month, which is about in line with the consensus forecast.
But Diane Swonk of Grant Thornton is among the more pessimistic economists, saying the damage will be much higher: 34 million destroyed in a single month.
That includes the 26 million job losses reflected in the weekly initial claims for unemployment benefits in the month, “plus an additional eight million workers who either were unable to process their application for UI or were undocumented workers who lost jobs,” she said.
“What’s even more stunning is the breadth of losses,” Swonk said. “They spanned virtually every industry and income category.”
And the 701,000 drop in payrolls in March likely will be revised to a figure much worse than initially reported when the Bureau of Labor Statistics (BLS) includes more accurate data from companies.
The consensus among economists is that the jobless rate will surge to just over 16 percent from a historic low of 3.5 percent in February, but some analysts also believe the rate could be much higher.
And even that double-digit rate underestimates the impact of the virus, since many employees are simply leaving the workforce altogether.
President Donald Trump and his economic team are hopeful for a quick rebound, once the virus is under control and businesses can reopen and rehire their workers.
“This country can’t stay closed and locked down for years,” Trump said Thursday.
But with new claims for unemployment benefits still at staggering levels, the jobless rate could go much higher still.
“We knew it was bad out there but it is looking like it is even worse that we thought,” economist Joel Naroff said in his analysis.
“Now I am wondering if we will hit 40 million (jobs lost), which would take us to an unemployment rate of 25 percent or more. That is truly scary, as you have to go back to the early 1930s, during the Great Depression, to see anything nearly like that,” he said.
Despite nearly $3 trillion in financial aid approved by Congress in March alone and trillions more in liquidity provided by the Federal Reserve, there is a growing fear that the temporary shutdowns imposed to contain the spread of the virus will become permanent for many companies.