Weekly job losses in the United States are slowing, but when viewed over the span of a month, the scale of labour market carnage from coronavirus is nothing short of stunning in its swiftness and severity.
Some 5.24 million Americans filed for initial jobless benefits in the week ending April 11, bringing total job losses for the month to a staggering 22 million, the US Department of Labor said on Thursday.
The culprit is well known by now. Coronavirus lockdowns have shuttered businesses, sent consumers into lockdown and thrown millions of people out of work.
While last week saw a deceleration in the number of people filing for unemployment benefits, the scale of disruptions validates the view of economists that the economy has plunged into a deep recession.
Economists are also noting that it will take time for the economy to recoup the millions of jobs lost.
“The fact that 22 million individuals have filed for unemployment benefits in just four weeks shows that the labor market has entered a traumatic period,” Lydia Boussour senior US economist at Oxford Economics wrote in a note to clients on Thursday. “While some jobs will be recouped as activity rebounds, we don’t expect the economy to reach the February 2020 level of employment until early 2022.”
Paul Ashworth, chief US economist at Capital Economics wrote in a note to clients on Thursday, “it’s now possible that the unemployment rate could even exceed 20% in May. Nevertheless, we do still expect the unemployment rate to come down much more quickly that during a normal economic recovery, as temporary layoffs return to work once the lockdowns are lifted, so we still wouldn’t characterise this as a depression-type event.”
Thursday’s initial jobless claims added to barrage of downbeat news on the US economy this week.
The construction of new homes in the US plummeted 22.3 percent in March from the previous month, the US Commerce Department reported on Thursday. It’s a key economic indicator because home construction jobs have a multiplier effect – creating more jobs as other businesses benefit from housing starts activity.
The Philadelphia Fed Manufacturing Index released on Thursday fell to its lowest level since 1980. The reading reinforced the New York Fed’s Empire Manufacturing Index released on Wednesday that showed factory activity in New York state – a hot zone in the US for the coronavirus pandemic – plummeted in April to its lowest level on record.
The Federal Reserve reported on Wednesday that total industrial production and manufacturing output in March in the US fell to their lowest levels since 1946 as factories closed their doors late in the month to stem the spread of COVID-19.
And the US Commerce Department reported on Wednesday that retail sales collapsed by 8.7 percent in March – also a record drop. While the fall was not as bad as some analysts were expecting, the reading is a key gauge of US consumer spending – the engine of the US economy – and the outlook for April is bleak.