It took 10 years for the U.S. economy to create 23 million new jobs. It took the coronavirus pandemic just a month to destroy almost as many.
The government on Thursday reported that another 5.25 million people applied for unemployment benefits in the second week of April, bringing new jobless claims in the past month to 22 million. Extrapolating from the information, Wall Street DJIA, -0.17% economists estimate the unemployment rate has leaped to record 15% or even higher.
The mind-boggling deluge of layoffs suggests the lost jobs nearly match all the employment gains since the end of the Great Recession from December 2007 to June 2009.
The economy didn’t begin adding new jobs until February 2010, eight months after the official end of the last recession. From that point on until February 2020, the U.S. created 23.3 million new jobs.
So: 23.3 million new jobs were created since 2010 — and 22 million jobs have vanished since mid-March.
“In four weeks, all of the job gains from the decade-long recovery following the Great Recession have been erased,” said senior economist Daniel Zhao of Glassdoor.
What’s also important to note is most of the job losses in the past month are unlikely to be permanent. Many and perhaps even most of the workers will be rehired or brought back if the economy begins to recover soon.
Now here’s where it gets a bit dicey.
Jobless claims, employment totals and the unemployment rate are all determined by separate government surveys. Thus all comparisons are inexact and not apples to apples.
The jobless claims figures are especially problematic. For one thing, about 900,000 new jobless claims would have been filed in the past month even if there had been no coronavirus crisis. As such that would mean fresh job losses tied to the pandemic are probably closer to 21 million.
On the flip side, many states are still struggling to process a record number of claims or have rejected applicants who were made eligible for the first time by a federal bailout package. So they are probably low-balling the current number of applications.
“There is some evidence that people are falling through the cracks,” said Neil Dutta, head of economics at Renaissance Macroresearch.
Adding to the confusion, the government adjusts jobless claims for seasonal swings. That makes sense in ordinary times, but not during a crisis of this magnitude. The actual number of people who have filed new jobless claims in the past month is a bit lower at 20 million.
If your head is spinning, don’t worry. Soon it will be a moot point anyway. New jobless claims are expected to rise by several million in each of the next few weeks and drive the total during the pandemic to 25 million or higher.
“While the claims numbers should decelerate, they could remain incredibly high for the next few weeks,” said Joel Naroff of Naroff Economic Advisors.
These figures don’t even include a large group of Americans likely totaling in the millions who are still being paid by their companies but are not working. The government is subsidizing many companies such as large airlines and small businesses to keep employees on payrolls in exchange for federal loans and grants.
Without the federal aid, job losses and the unemployment rate would be a lot higher.
How long it takes to re-employ 22-plus million Americans is an open question. Oxford Economics predicts employment might not return close to pre-crisis levels until at least 2022.
Originally Published on MarketWatch
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