More than 20 million US jobs vanished in April, ADP report
A 20-year Treasury bond, part of $2.99 trillion borrowing
BALTIMORE, May 7, (AP): U.S. businesses cut an unprecedented 20.2 million jobs in April, an epic collapse with coronavirus outbreak closing the offices, factories, schools, construction sites and stores that propel the U.S. economy.
The Wednesday report from payroll company ADP showed the tragic depth and scale of job losses that left no part of the world’s largest economy unscathed. The losses will likely continue through May, with a recovery in hiring likely to begin in the months that follow, said Mark Zandi, chief economist at Moody’s Analytics.
“This is one for the record books,” Zandi said. ”The good news is that we’re at the apex of the job loss.”
Even though Zandi expects hiring to resume in June as states ease lockdowns, he cautioned that it will be a “slog” over several years to recover all the jobs lost in April.
The private industry report comes two days ahead of the official monthly job figures from the U.S. Labor Department. Economists believe the Friday report will reveal unemployment in the U.S. stands at a shocking 16%, up from 4.4% in March.
According to ADP, the leisure and hospitality sector shed 8.6 million workers last month. Trade, transportation and utilities let 3.4 million people go. Construction firms cut nearly 2.5 million jobs, while manufacturers let go of roughly 1.7 million people. The health care sector cut 1 million jobs, but education services eked out a gain of 28,000 as colleges and universities do not appear to have forced significant layoffs that could come later this year.
More than half of April’s job losses came from smaller companies with 500 workers or fewer. But larger employers cut 8.9 million jobs. Polling by The Associated Press and NORC Center for Public Affairs Research indicates that nearly eight in 10 households that suffered job losses expect to return to their previous employer.
Meanwhile, the Treasury Department is detailing how it plans to borrow a record-breaking $2.99 trillion in debt this quarter which will include issuing for the first time since 1986 a 20-year bond.
The Treasury faces an unprecedented need for credit because of the trillions of dollars the government is spending to deal with the impact of the coronavirus pandemic, which has resulted in the loss of millions of jobs.
And the nation is likely headed for a deep recession.
Treasury officials said Wednesday that the 20-year bond will be auctioned on May 20 with the goal of raising $20 billion. That will be followed by $17 billion auctions in June and July.
Senior officials believe the Treasury market will be able to handle the big increase in the government’s borrowing needs.
Brian Smith, deputy assistant Treasury secretary for federal finance, told reporters that the Treasury in April has already raised $1.46 trillion of the $2.99 trillion in increased borrowing expected for this quarter without any disruption to the functioning of the Treasury market.
“The Treasury market remains the deepest and most liquid market in the world,” Smith said. “I remain very confident in the depth and liquidity of the Treasury market.”
The Treasury announced Monday that it planned to borrow $2.99 trillion in the April-June quarter, more than five times the previous quarterly borrowing record of $569 billion set at the height of the financial crisis a decade ago.
In addition to the 20-year bond auctioned on May 20, Treasury said it would hold a series of auctions next week, starting on Monday, to raise $96 billion by selling three-year and 10year notes and a 30-year bond.
The $2.99 trillion in borrowing for just this quarter exceeds the $1.28 trillion the government borrowed in the bond market all of last year.
The huge sum is needed to pay for nearly $3 trillion in rescue aid that the government has unleashed in programs to support tens of millions of people now jobless, as well as shuttered businesses, with direct payments and loans.
In addition, the government needs to borrow to cover the shortfall in revenue that will occur because the Trump administration has delayed the deadline for tax payments this year from April to June.
The Congressional Budget Office is forecasting that the government will run a record deficit of $3.7 trillion this year, far above the $1 trillion-plus annual deficits recorded from 2009 through 2012 when the government was fighting the 2008 financial crisis and a deep downturn that followed.