Washington: The US economy shed 701,000 jobs in March, driving the unemployment rate up to 4.4 per cent, as measures to fight a worsening coronavirus pandemic began taking their toll on Americans’ livelihoods.
The losses ended the economy’s 113-month streak of job growth, but represented only the first signs of the unprecedented damage being inflicted on the labour market. In the past two weeks, 10 million Americans have filed first-time claims for unemployment insurance, the result of mandatory social distancing that is keeping most people from working normally.
Economists had expected a drop of about 100,000 jobs. But investors dismissed today’s Labor Department report as outdated, since it was based on a monthly survey that was completed on March 14 — before many state governments ordered the economy to a halt in hopes of disrupting the spread of the sometimes-fatal respiratory illness.
“It’s largely irrelevant in light of what we’re expecting to see in April,” said Gregory Daco, chief US economist for Oxford Economics. “It’s going to be really bad.”
As laid-off workers continue streaming into state unemployment offices, next month’s job losses could reach an astonishing 24 million, Daco said. That would push the total number of jobless Americans to roughly 30 million, nearly twice the total at the 2009 depths of the global financial crisis.
The US economy has endured 11 recessions since World War II, but it has never experienced anything like what is now occurring. Official stay-at-home orders intended to arrest the pandemic are keeping Americans from working and consuming.
For workers, the worst is yet to come: by midyear, the nation will likely be suffering its highest unemployment rate in nearly 40 years and possibly the worst since the Great Depression. Bank of America says the jobless rate will hit 15.6 per cent. Goldman Sachs pegs it at 15 per cent while the non-partisan Congressional Budget Office estimates 12 per cent for the second quarter.
“This recession is huge and extremely abrupt ... We could be at levels evoking the Great Depression,” said economist Erica Groshen, a former commissioner of the Bureau of Labor Statistics.
In a matter of weeks, the economy has plummeted from steady growth and abundant job opportunities to dire hardship. The impact is being felt widely. Over the past two weeks, every state in the nation reported its highest-ever initial jobless claim total as the economy shuddered to a sudden stop, according to the Economic Policy Institute.
In a poll by the Kaiser Family Foundation, 39 per cent of Americans said they have lost their job, accepted a pay cut or had their hours reduced because of the pandemic.
“We cannot foresee any part of the economy being safe from virus-related shutdowns. Companies whose survival now depends on cutting costs have no choice but to cut payrolls,” economist Rubeela Farooql of High-Frequency Economics wrote Thursday in a note to clients.