The US economy lost a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression and the starkest sign yet of how the novel coronavirus pandemic is battering the world's biggest economy.
The Labor Department's closely watched monthly employment report on Friday also showed the unemployment rate surging to 14.7% last month, shattering the post-World War Two record of 10.8% touched in November 1982.
The bleak numbers strengthen analysts' expectations of a slow recovery from the recession caused by the pandemic, adding to a pile of dismal data on consumer spending, business investment, trade, productivity and the housing market. The report underscores the devastation unleashed by lockdowns imposed by states and local governments in mid-March to slow the spread of COVID-19, the respiratory illness caused by the virus.
The economic crisis spells trouble for President Donald Trump's bid for a second term in the White House in November's election. After the Trump administration was criticized for its initial reaction to the pandemic, Trump is eager to reopen the economy, despite a continued rise in COVID-19 infections and dire projections of deaths.
"Our economy is on life support now," said Erica Groshen, a former commissioner of the Labor Department's Bureau of Labor Statistics. "We will be testing the waters in the next few months to see if it can emerge safely from our policy-induced coma," added Groshen, who is now a senior extension faculty member at the Cornell University School of Industrial and Labor Relations.
Economists polled by Reuters had forecast nonfarm payrolls diving by 22 million. Data for March was revised to show 870,000 jobs lost instead of 701,000 as previously reported. A record streak of job growth dating to October 2010 ended in March. The unemployment was forecast rising to 16% from 4.4% in April.
Though millions of Americans continue to file claims for unemployment benefits, April could mark the trough in job losses. More small businesses are accessing their portion of an almost $3 trillion fiscal package, which made provisions for them to get loans that could be partially forgiven if they were used for employee salaries.
The Federal Reserve has also thrown businesses credit lifelines and many states are also partially reopening.
Companies like Walmart and Amazon are hiring workers to meet huge demand in online shopping. Truck drivers are also in demand, while supermarkets, pharmacies and courier companies need workers. Still, economists do not expected a quick rebound in the labor market.
"Given the expected shift in consumer behavior reflecting insecurities regarding health, wealth, income, and employment, many of these firms will not reopen or, if they do reopen, hire fewer people," said Steve Blitz, chief economist at TS Lombard in New York. "This is one reason why we see the underlying recession extending through the third quarter." Economists say the economy entered recession in late March, when nearly the whole country went into COVID-19 lockdowns.
The National Bureau of Economic Research, the private research institute regarded as the arbiter of U.S. recessions, does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.