Nearly 3.2 million laid-off workers applied for unemployment benefits last week as the business shutdowns caused by the coronavirus outbreak deepened the worst US economic crisis in decades.
Roughly 33.5 million people have filed for jobless aid in the seven weeks since Covid-19 began forcing millions of companies to close their doors and slash their workforces.
That is the equivalent of one in five Americans who had been employed back in February, when the unemployment rate had reached a 50-year low of 3.5%.
On Friday, the government will issue the April jobs report, and it is likely to be the worst since modern record-keeping began after World War Two.
The unemployment rate is forecast to reach at least 16%, the highest rate since the Great Depression, and economists estimate that 21 million jobs were lost last month.
Unemployment Insurance Weekly Claims— US Labor Department (@USDOL) May 7, 2020
Initial claims were 3,169,000 for the week ending 5/2 (-677,000).
Insured unemployment was 22,647,000 for the week ending 4/25 (+4,636,000).https://t.co/ys7Eg5LKAW
If so, it would mean that nearly all the job growth in the 11 years since the Great Recession ended has vanished in a single month.
Even those stunning figures will not fully capture the magnitude of the damage the coronavirus has inflicted on the job market.
Many people who are still employed have had their hours reduced. Others have suffered pay cuts. Some who lost jobs in April and did not look for a new one in light of their bleak prospects will not even be counted as unemployed.
A broader measure — the proportion of adults with jobs — could hit a record low.
The official figures for jobless claims may also be under-counting lay-offs.
Surveys by academic economists and think tanks suggest that as many as 12 million workers who were laid off by mid-April did not file for unemployment benefits by then, either because they could not navigate their state’s overwhelmed systems or they felt too discouraged to try.
As the economy slides further into what looks like a severe recession, economists are projecting that GDP — the broadest gauge of economic growth — is contracting in the current April-June quarter by a shocking 40% annual rate.
As it does, more lay-offs appear to be spreading beyond front-line industries like restaurants, hotels and retail stores.
GE Aviation, for example, has said it is cutting up to 13,000 jobs while Uber will shed 3,700 positions. MGM Resorts International has announced that the furloughs of more than 60,000 employees could turn into lay-offs.
But the job cuts have hammered workers at restaurants, hotels and retail firms particularly hard. According to the payroll processor ADP, about half the total jobs in the hotel and restaurant industry — 8.6 million — disappeared in April, based on data from its corporate clients.
A category that includes retail and shipping shed 3.4 million workers.
As businesses across the country have shut down and laid off tens of millions, the economy has sunk into a near-paralysis.
Even as some businesses are beginning to reopen in certain states, factories, hotels, restaurants, resorts, sporting venues, cinemas and many small businesses are still largely shut. Home sales are falling while consumer confidence and spending are sinking.