One in four US workers has lost their job since mid-March

Evidence is mounting that the worst ravages of coronavirus lockdowns may be behind the United States jobs market. But each new batch of jobless claims underscores the tremendous amount of ground the labour market has to recover to return to its pre-pandemic strength.

Some 2.1 million Americans filed initial jobless claims in the week ending May 23, the US Department of Labour reported on Thursday, pushing the total number of people filing for unemployment benefits since mid-March above 40 million. 

Put another way, roughly one in four adult workers in the US has been thrown out of work since coronavirus containment measures shut down entire sectors of the US economy.

While the pace of weekly job losses continues to slow from a March peak of 6.9 million, the numbers are still historically high.

Moreover, they do not capture the full scale of the carnage because people receiving benefits under state and federal emergency programmes, like gig workers and the self-employed, are not included in the headline numbers.

Still, the number of people already collecting unemployment benefits – a metric known as “continuing claims” – trended downward for the first time to 21 million people in the week ending May 2 – a decrease of 3.86 million from the previous week. 

“The drop in continuing claims suggests labour market conditions are now beginning to improve again as workers are recalled to their jobs, either because their employer has received funds through the Paycheck Protection Program or because businesses have reopened,” Michael Pearce, senior US economist at Capital Economics wrote in a note to clients. 

All 50 US states have started scaling back coronavirus lockdown measures and green shoots of economic activity are appearing – including consumer spending which accounts for roughly two-thirds of US economic growth.

Still, the labour market has a long recovery ahead of it.

“It will be years until the unemployment rate returns to pre-virus levels, but with most of the layoffs temporary, we expect the labour market to recover faster than usual, with the unemployment rate below 10% by the end of the year,” wrote Pearce. 

Revised figures for first-quarter US economic growth released on Thursday offered another snapshot of the damage wrought by coronavirus lockdowns.

Figures for US gross domestic product (GDP), which measures the value all goods of services produced in the country, were revised downward to show the economy shrank 5 percent in the first three months of the year, compared with the 4.8 percent contraction that was initially reported.

Though that is the steepest decline since the 2008 financial crisis, economists are bracing for far more dire numbers in the second quarter.

Oxford Economics senior US economist Lydia Boussour wrote in a client note: “The worst is yet to come in Q2 with a near-40% GDP plunge.”

She added: “Given the magnitude of the shock, the Global Coronavirus Recession is all but certain to leave a scar on the US economy.”