As the US economy craters, crippled by coronavirus shutdowns, businesses jettisoned jobs at an alarming rate last month, government data showed Friday, and the situation will get dramatically worse. US employment plunged by 701,000 in March and the jobless rate surged to 4.4 percent, the Labor Department reported.
Yet the department acknowledged its statistics could not yet capture the full extent of the damage, and its own weekly data on first-time claims for jobless benefits showed 10 million people lost their jobs in the last two weeks of the month.
With COVID-19 cases topping a million worldwide, a quarter of which are in the United States where the death toll is over 6,000, cities have turned into ghost towns and officials are struggling to find ways to ease the ruinous damage to the economy and individuals.
“The drop in payrolls in March was unprecedented for the start of a recession and will get more than twenty times worse in April,” said Diane Swonk of Grant Thornton.
“We will easily lose more than twice as many jobs as we lost during the Great Recession during the first two months of this crisis alone,” she said in an analysis.
The monthly report reveals the worst monthly job loss since the depths of the global financial crisis in March 2009 and the biggest single-month jump in the jobless rate in more than 45 years.
However, the Labor Department said it “cannot precisely quantify the effects of the pandemic on the job market in March,” and errors in counting those who lost jobs mean the unemployment rate was likely a full point higher.
Economists predict the figures in April will be devastating, with a double digit unemployment rate and as many as 20 million jobs destroyed.
The leisure and hospitality sector — among the first to feel the impact of the travel restrictions imposed to contain the virus — lost 459,000 jobs last month, the report said.
But the harm was widespread and notable losses also were recorded in healthcare, retail and business services. The data were released on the same day as the government began a new program to encourage businesses to retain workers and rehire those who were laid off.
But House Speaker Nancy Pelosi said the government needs to do much more to soften the blow, and “extend and expand” on the $2.2 trillion rescue package known as CARES passed just one week ago.
“It is imperative that we go bigger and further assisting small business, to go longer in unemployment benefits … and to give families additional direct payments,” Pelosi said in a statement, calling for a relentless bipartisan effort to pass a second stimulus bill.
– Underestimating the damage –
“This is terrible but unfortunately it’s nothing compared to what’s coming in April,” said Ian Shepherdson of Pantheon Macroeconomics, who predicts a jobless rate of 12 to 14 percent next month.
The two surveys that make up the closely-watched monthly government jobs report are taken during the week that includes the 12th of the month, which in March was before the most restrictive of the lockdowns were imposed that closed businesses nationwide.
That means the “surveys predated many coronavirus-related business and school closures,” the report said. Even if it underestimates the true job losses, the payroll drop was far larger than analysts had forecast
