U.S. economy lost 20.5 million jobs in April
Unemployment rate surged to 14.7 per cent last month
The U.S. 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 coronavirus pandemic is battering the world's biggest economy.
The Department of Labour's closely watched monthly employment report on Friday also showed the unemployment rate surging to 14.7 per cent last month, shattering the post-Second World War record of 10.8 per cent 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.
A White House official predicted Friday that the unemployment rate for May will be even worse. White House economic advisor Kevin Hassett told CNN he expected the jobless rate will move up to 20 per cent this month, adding the economy should transition to stronger footing in the summer.
"I think we're going to enter a transition period this summer before we have sort of another re-ignition of the economy."
'On life support'
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 has been eager to reopen the economy, despite a continued rise in COVID-19 infections and dire projections of deaths.
"Those jobs will all be back, and they'll be back very soon," Trump said on Fox News following the release of the employment report.
"Our economy is on life support now," said Erica Groshen, a former commissioner of the Labour Department's Bureau of Labour Statistics.
"We will be testing the waters in the next few months to see if it can emerge safely from our policy-induced coma," said 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 non-farm 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. Unemployment was forecast to rise to 16 per cent from 4.4 per cent in March.
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 US fiscal package, which made provisions for them to get loans that could be partially forgiven if they were used for employee salaries.
Online shopping in high demand
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 labour market.
"Given the expected shift in consumer behaviour reflecting insecurities regarding health, wealth, income and employment, many of these firms will not reopen or, if they do reopen, [they will] 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 U.S. economy entered recession in late March, when nearly the whole country went into COVID-19 lockdowns.