Coronavirus torpedoed the United States jobs machine in March. And the destruction is much worse than the headline numbers suggests.
The economy lost 701,000 jobs last month, the US department of Labor reported on Friday – abruptly ending 113 straight months of jobs creation as businesses and factories closed shop and people locked down to contain the spread of COVID-19. The unemployment rate rose to 4.4 percent.
Friday’s data confirms the view of most economists that the US is already in a deep recession as containment measures bring entire sectors of the economy to a screeching halt, throwing millions of Americans out of work.
Moreover, the monthly employment data understates the true scale of the carnage roiling the US labour market because the government surveyed businesses and households in the middle of March, when many parts of the nation were not yet under lockdown and many businesses and schools had not yet closed.
“We cannot precisely quantify the effects of the pandemic on the job market in March. However, it is clear that the decrease in employment and hours and the increase in unemployment can be ascribed to the effects of the illness and efforts to contain the virus,” said the US Bureau of Labor Statistics.
More timely data was released by the Department of Labor on Thursday showed that the number of Americans filing for initial jobless benefits for the two weeks ending March 28 surged to 10 million.
That number shatters all previous records. But here again, the data failed to capture the true number of people thrown out of work, because the self-employed and gig workers only gained eligibility to government funded unemployment benefits last Friday, when President Donald Trump signed an historic $2.2 trillion virus relief package into law.
Many state unemployment offices have also been overwhelmed by a tsunami of applications, further muddying the statistics.
“The weekly initial jobless claims data suggest the true unemployment rate is already closer to 10 percent, and that we should be braced for a decline in payrolls of up to 10 million in April,” Andrew Hunter, Senior US economist at Capital Economics wrote in a note to clients.
Economists also point out that the sudden closure of so many businesses in such a short time frame makes it difficult for government surveys to accurately capture the true scale of layoffs.
The devastation sweeping the nation’s labour market is political fodder for those who have criticized President Donald Trump’s handling of the coronavirus public health crisis and his initial playing down of the pandemic in its early stages.
The US has 245,601 confirmed cases of COVID-19- the highest in the world- and the death toll in the country from the virus has reached at least 6,058, according to Johns Hopkins University.