A report that is closely monitored in a given month, but most importantly now with non-core businesses in nationwide mandatory closures to contain coronavirus, the Ministry of Labor’s monthly employment report on Friday should also show that the unemployment rate climbed to at least 16% last month. This would break the 10.8% record reached after the Second World War in November 1982.
The numbers are likely to bolster analyst expectations of a slow recovery from the recession caused by the pandemic. This would add to a bunch of grim data on consumer spending, business investment, trade, productivity and the housing market, highlighting the devastation triggered by locks imposed by state and local governments in mid- March to slow the spread of COVID-19, the respiratory disease caused by the virus.
The economic crisis is causing unrest for President Donald Trump’s candidacy for a second term in the White House in the November elections. After the Trump administration has been criticized for its initial response to the pandemic, Trump is eager to reopen the economy, despite a continued increase in COVID-19 infections and dire forecasts of death.
“Our economy is now on vital assistance,” said Erica Groshen, former commissioner of the Bureau of Labor Statistics of the Department of Labor. “We will be testing the waters in the coming months to see if they can safely emerge from our policy-induced coma,” added Groshen, who is now a senior extension faculty member at Cornell University School of Industrial and Labor Relations.
Non-farm wage plunge in April predicted in Reuters survey predicts job losses in almost every sector of the economy, with more layoffs in the leisure and hospitality industries – mainly restaurants and bars. It would follow the loss of 701,000 jobs in March, which ended a record streak of job gains in October 2010.
The survey estimates went as far as a loss of 35 million. Forecast for the unemployment rate for April, which was 4.4% in March, was 22%.
Great uncertainty surrounds last month’s estimates due to the nature and speed of job losses.
A total of 26.5 million people applied for unemployment benefits and 16.2 million were unemployed during the week of April 12, when the government interviewed establishments and households for wages and rates. unemployment.
Eligibility for unemployment benefits has been significantly expanded to include entrepreneurs and concert workers, among others, overwhelming local employment offices with demands and causing delays. Economists believe that the number of people applying for unemployment assistance and those who continue to receive benefits are underestimated.
During this time, some people may be able to file more than one claim, and workers whose hours have been reduced due to COVID-19 may also apply for unemployment benefits.
Some workers who have filed claims have likely found jobs since then, companies like Walmart and Amazon hiring workers to meet the huge demand in online shopping. Truck drivers are also in demand, while supermarkets, pharmacies and courier companies need workers.
According to the Labor Statistics Office of the Labor Department, which prepares the employment report, a person must look for work and be available to do so to be considered unemployed.
“This means that many workers who lose their jobs because of the virus will be counted as having left the workforce instead of being unemployed because they are unable to look for work due to the blockage.” , or because they’re not available for work because they take care, for example, of children whose school has closed, ”said Heidi Shierholz, former chief economist in the Labor Department.
Workers on leave and those planning to return to work within 6 months are counted as unemployed temporarily laid off.
A drop in the labor force participation rate or in the proportion of working-age Americans who are employed or looking for a job may help offset some of the expected increase in the unemployment rate in April.
To get a clearer picture, economists will focus on a broader measure of unemployment, which includes people who want to work but have given up looking and those who work part-time because they can’t find a job fulltime.
The month of April could, however, mark the bottom of job losses, as more and more small businesses access their portion of a tax package of nearly $ 3,000 billion, which has enabled them to obtain loans that could be partially canceled if used for employee wages. The Federal Reserve has also thrown lifelines at businesses and many states are also partially reopening.
Yet economists do not expect a rapid rebound in the labor market.
“Given the expected change in consumer behavior reflecting insecurities regarding health, wealth, income and employment, many of these businesses will not reopen or, if they reopen, will hire fewer people,” said Steve Blitz, chief economist at TS Lombard in New York. “This is one of the reasons why we see the underlying recession extending into the third quarter.”
Economists say the economy went into recession in late March, when almost the whole country entered COVID-19 blockages.
The National Bureau of Economic Research, the private research institute considered to be the arbiter of American 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 country. Instead, he is looking for a drop in activity, spread across the economy and spanning more than a few months.
Report by Lucia Mutikani; Editing by Chizu Nomiyama
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