The figures collectively constitute the largest and fastest string of job losses in records dating to 1948. They paint a picture of a job market that is quickly unraveling as businesses have shut down across the country because of the coronavirus outbreak. More than 20 million Americans may lose jobs this month.
The viral outbreak is believed to have erased nearly one-third of the economy’s output in the current quarter. Forty-eight states have closed non-essential businesses. Restaurants, hotels, department stores and small businesses have laid off millions as they struggle to pay bills at a time when their revenue has vanished.
All told, in the past three weeks, 16.6 million Americans have filed for unemployment aid. The surge of jobless claims has overwhelmed state unemployment offices around the country. And still more job cuts are expected. The unemployment rate could hit 15% when the April employment report is released in early May.
As job cuts mount, here are five aspects of the bleakest U.S. job market in memory.
APPLICATIONS FOR UNEMPLOYMENT AID KEEP RISING
Some analysts project that another record will be set by the number of claims filed for the week that ended April 4, which will be reported Thursday at 8:30 am. Jesse Edgerton, an economist at JPMorgan Chase, forecasts that 7 million people sought benefits that week. That would top the previous week’s stunning record of 6.6 million.
Up to 50 million jobs are vulnerable to coronavirus-related layoffs, economists say – about one-third of all the jobs in the United States. That figure is based on a calculation of positions that are deemed non-essential by state and federal governments and that cannot be done from home. It’s unlikely all those workers will be laid off or file a jobless claim. But it suggests the extraordinary magnitude of unemployment that could result from the pandemic.
Beth Ann Bovino, chief economist at S&P Global Ratings, said she thinks layoffs will send the unemployment rate to 15% next month, with at least 13 million jobs lost. Consider that during the Great Recession, which ended in 2009, unemployment never went above 10%.
“It’s unbelievable that I am saying this,” Bovino said. “It’s mind-boggling.”
SELF-EMPLOYED ARE AMONG THOSE STRUGGLING TO FILE
Even with applications for unemployment aid surging, some of the newly jobless are running into trouble applying for benefits. The federal government’s $2.2 trillion economic relief package expands unemployment insurance to groups that previously weren’t eligible, including the self-employed, gig workers, and independent contractors. Yet many states haven’t updated their websites to reflect the new rules. This has caused bottlenecks, particularly in California, which includes a significant contingent of self-employed and gig workers.
ECONOMY IS LIKELY IN A DEEP RECESSION
The data on the U.S. economy is also bleak. With the vast majority of the country enduring business shutdowns, economic activity has slowed to a near-halt. Janet Yellen, the former chair of the Federal Reserve, said Monday that the economy would likely shrink at a 30% annual rate in the April-June quarter – a contraction that would be unmatched in records dating to World War II.
“This is a huge, unprecedented, devastating hit,” Yellen said.
WHICH STATES ARE WORST HIT?
In last week’s report, more states reported sharp increases in applications for unemployment benefits than in the previous week. A key reason was that more states and localities adopted stay-at-home orders against the virus. Forty-six out of the 50 states reported a rise in benefit applications, with only Rhode Island, Minnesota, Nevada and New Hampshire reporting declines, which will likely prove temporary. The biggest states – California, Texas, and New York – still reported huge increases. In California, claims jumped 27% to more than 850,000.
WILL LAST WEEK’S FIGURE BE REVISED UP?
With most state unemployment offices swarmed by applications, state agencies may send more detailed counts to the U.S. Labor Department, which reports the national figures, a week after the initial report. That suggests that last week’s report of 6.6 million jobless claims could be revised, likely higher. The figure that was reported two weeks ago of 3.3 million was revised slightly higher the following week.
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