COVID-19 pandemic destroys 20.5 million US jobs in April in historic collapse

COVID-19 pandemic destroys 20.5 million US jobs in April in historic collapse

Nearly deserted Wall Street and steps of Federal Hall in lower Manhattan during outbreak of coronav
FILE PHOTO: A nearly deserted Wall Street and the steps of Federal Hall are seen in lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 3, 2020. REUTERS/Mike Segar

WASHINGTON: The COVID-19 lockdown wiped out 20.5 million jobs in the United States in April, destroying nearly all the positions created in the prior decade in the world's largest economy, the Labor Department reported Friday (May 8). 

The unprecedented collapse drove the unemployment rate to 14.7 per cent - well beyond the peak hit in late 2009 during the global financial crisis - and from 4.4 per cent in March.

This is the steepest plunge in payrolls since the Great Depression, also shattering the post-World War Two record of 10.8 per cent in November 1982.

Job losses in March were worse than initially reported, falling 870,000 even though the business closures mostly happened in the second half of the month. 

President Donald Trump on Friday downplayed the unprecedented job losses, saying they were not a surprise.

"It's fully expected, there's no surprise. Somebody said, 'oh look at this,'" he said on Fox News minutes after the Labor Department published the figures.

"I'll bring it back," he said.

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 monthly employment report underscored the devastation unleashed by lockdowns imposed by states and local governments in mid-March to slow the spread of COVID-19. 

COVID-19 has infected more than 1.25 million Americans and killed more than 75,000, the world's highest number of cases and deaths.

ECONOMY "ON LIFE SUPPORT"

"Our economy is on life support now," said Erica Groshen, a former commissioner of the Labor Department's Bureau of Labor Statistics. 

"We will be testing the waters in the next few months to see if it can emerge safely from our policy-induced coma," added Groshen, who is now a senior extension faculty member at the Cornell University School of Industrial and Labor Relations.

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 US$3 trillion fiscal package, which made provisions for them to get loans that could be partially forgiven if they were used for employee salaries.

The Federal Reserve has also thrown businesses credit lifelines and many states are also partially reopening.

Companies such as 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 behavior reflecting insecurities regarding health, wealth, income, and employment, many of these firms will not reopen or, if they do reopen, 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 economy entered recession in late March, when nearly the whole country went into COVID-19 lockdowns.

The National Bureau of Economic Research, the private research institute regarded as the arbiter of US 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 countries.

Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.

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Source: Agencies/ad

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