Sad and Worse and Worse: America Ready for Historic Rise in Unemployment
WASHINGTON: Like a global tsunami, the pandemic has caused a great loss of life and has come at a massive economic price.
In the United States economy, dizzying unemployment is the most visible sign of devastation: Almost overnight, at least 30 million workers lost their jobs.
The April employment report, to be released on Friday, is expected to show the unemployment rate skyrocket to double-digits, perhaps as much as 20 percent, far outweighing the worst of the global financial crisis and reaching levels not seen since the Great Depression of the last century.
The US government. USA And the central bank worked at an astonishing rate to send aid and financing to workers and companies to try to avoid a complete economic collapse, but there is a growing fear that temporary closures imposed to contain the spread of the virus will become permanent for many companies.
The coronavirus has infected nearly 1.2 million people in the United States and killed around 70,000, according to a count by Johns Hopkins University , and analysts fear that part of the economic damage may be permanent.
We're going down the elevator, but we're going to need to go up the stairs again, said Tom Barkin, president of the Federal Reserve Bank of Richmond, in a recent speech.
Despite nearly $ 3 trillion in financial aid approved by Congress in March alone and trillions more in liquidity provided by the Federal Reserve, the US economy. USA It contracted 4.8 percent in the first three months of the year, a period that included just a couple of weeks of the strict business closings.
The second quarter could see the economy drop twice that amount.
The data on the labor market has gotten so bad so fast that there are no comparisons.
Statistics in the work Department The Bureau of Labor Statistics (BLS), which produces the monthly unemployment report, is using natural disasters as a benchmark.
The closest thing we have in terms of what was in our playbook has generally been hurricanes, because they tend to be large and impact significant periods or areas, the BLS Associate Commissioner told AFP.
But even devastating events, like Hurricane Katrina in 2005, were regional, not national, and certainly not global.
Job losses spread from airlines and hotels to restaurants and factories, as states ordered lockouts and then closed schools, sending initial unemployment insurance claims that have increased since mid-March, with 20 million posted in the four weeks of April only.
But those numbers may underestimate the true size of the shock, as many people have been unable to apply for benefits and others do not qualify.
The official unemployment rate in March rose from a record low of 3.5 percent to 4.4 percent, with 701,000 jobs lost.
But the monthly data, which is separate from the unemployment claim reports, is calculated only during the pay period that includes the 12th of each month, so the real picture was also lost. BLS said the household survey likely underestimated the unemployment rate, which should have been 5.4 percent.
April will be much worse, as some economists project job losses at 28 million and an unemployment rate of 17 percent. And as more companies report their data, job losses in March are expected to be revised upward as well.
In comparison, job losses during the global financial crisis in 2008 and 2009 totaled 8.6 million and the unemployment rate reached 10 percent.
Even among workers who are still employed, many have seen their hours reduced.
Economists also fear that the gains made during the 2009 economic expansion by bringing more minorities into the workforce are eroding.
It is now clear that the economy was in a downdraft much faster than anyone expected, said Diane Swonk, chief economist at Grant Thornton , he told AFP.
Expansive government aid programs mean the United States could see a temporary hike in hiring in May and June, Swonk said.
But if small businesses don't return to normal in July, which will be determined by whether consumers feel safe enough to return to restaurants and shops, they will have to fire them again, he said.
Last week, Federal Reserve Chairman Jerome Powell warned of the lingering damage caused by the temporary closings and said it will take some time to return to a more normal level of unemployment.