National jobless rate soars to 14.7%
Under the COVID-19 pandemic, U.S. unemployment has soared by 10 percentage points in barely a month.
The U.S. economy lost 20.5 million jobs in April and the unemployment rate soared to 14.7% – both record highs – laying bare the starkest picture yet of the crippling gut punch delivered by the coronavirus pandemic.
In just a month, the historically dismal performance abruptly wiped nearly all the nation’s job gains since the Great Recession of 2007-09.
The reversal has been head-spinning: The jobless rate had touched a 50year low of 3.5% in February before rising to 4.4% the following month amid the early effects of the crisis.
Although the job losses are Great Depression-like, the reality is more nuanced. The government took the unprecedented step of placing the economy into a kind of induced coma to contain the spread of the virus. That could mean a swift rebound as businesses reopen, though a significant portion of the damage is expected to last years.
The share of Americans working or looking for jobs, which make up the labor force, tumbled from 62.7% to 60.2%, the lowest since 1973, the Labor Department said. Many people who lost jobs didn’t look for work because of fears of catching the virus while job hunting, caring for sick relatives or watching children who were home with schools closed. Also, with much of the economy shuttered, there were few jobs available.
Also, many workers incorrectly said they were employed but absent from work, the Labor Department said. If they had been properly classified, the unemployment rate would have shot as high as 20%. A hopeful sign: Of the 20.6 million workers who lost jobs in April, 18 million said they were on temporary layoff, indicating the lion’s share of the positions could come back when businesses reopen.
“The fact that so many of the job losses are temporary is encouraging, and suggests businesses will have an easier time re-opening once they are confident doing so,” said economist Leslie Preston of TD Economics. “However, the millions of workers who have left the labor force will need to be drawn back in, and this process could take time.”
Stocks jumped in early trading Friday despite the record job losses, as hopes grow among investors that the worst has passed for the U.S. economy.
A ghastly employment report was widely anticipated after 22 million Americans filed initial claims for unemployment insurance in the weeks leading up to the mid-April jobs survey. Since then, another 9 million workers have sought benefits, though they will likely be counted among May’s job losses.
Although the numbers are staggering, the economy’s medium-term outlook is unknown. More than 40 states have started allowing businesses to partially reopen despite a still-rising number of coronavirus cases. Assuming the pandemic eases by the summer, economists expect a solid recovery in the second half of the year.