The US unemployment rate has risen to 14.7%, with 20.5 million jobs lost in April, as the coronavirus pandemic devastated the economy.
The rise means the jobless rate is now worse than at any time since the Great Depression of the 1930s. Since the pandemic began, the US has suffered its worst growth numbers in a decade and the worst retail sales report on record.
Just two months ago, the unemployment rate was at 3.5%, a 50-year low. “It is historically unprecedented,” said economist Erica Groshen, former head of the government’s Bureau of Labor Statistics, who now teaches at Cornell University. “We have put our economy into a medically induced coma in order to heal it from the pandemic… and that has led to the most precipitous loss of jobs seen in any of the modern data.”
The Labor Department report showed declines in every sector of the economy.
Leisure and hospitality was hit especially hard, with payrolls falling by 7.7 million or 47%. Employers in education and health services cut 2.5 million positions, while retailers shed 2.1 million.
The Labor Department said the vast majority of the losses – 18.1 million – were described as temporary layoffs, a sign that many companies are hopeful that the economy will be able to rebound.
But economists warned that the pandemic is likely to force major changes to businesses – such as limits on how many people may be in a restaurant at one time – that could reduce the need for workers. And the longer the shutdown lasts, the more likely it is that a business will not survive.
“Even a temporary layoff can turn into a permanent one if the business doesn’t survive or if the business has to change its business model so dramatically that it needs different numbers or a different kind of worker,” Ms Groshen said.
Bankruptcies have already claimed retailers such as J Crew and Neiman Marcus, as well as many firms in the energy sector, where a collapse in oil prices, due in part to a pandemic-related drop in demand, has worsened the strains.
While some states have already started to relax restrictions, re-starting the economy is likely to be difficult, as workers worry about the risk of infection and grapple with the impact of school closures.
“I’m not certain what’s going to happen next,” said Tanya Nikolaevskaya, a legal assistant in New York, who was furloughed last month, after working from home in March.
Ms Nikolaevskaya hopes to return to what she described as her dream job, but she has a medical condition that makes her worried about infection and is a single mother, whose 8-year-old daughter will need care if schools do not reopen.
“It’s all about, ‘Is there childcare,'” she said. “If I will not have childcare, I will not be able to go back.”
Weekly figures released on Thursday showed a further 3.2 million Americans sought unemployment benefits last week. That brought the total number of jobless claims since mid-March to 33.3 million- or about 20% of the US workforce.
“The scale of the challenge cannot be overstated,” said Richard Alster, head of investment services at wealth manager Close Brothers Asset Management.
Source: bbc.com
