On Thursday, in yet another discouraging unemployment report, the U.S. Department of Labor disclosed that 5.2 million Americans filed for unemployment insurance last week.
More than 22 million Americans have lost their jobs since federal and state governments mandated non-essential companies to shut down their businesses and ordered people to shelter in place to stop the spread of COVID-19 pandemic.
It’s sobering to recognize that roughly all of the jobs that were added after the Great Recession are now gone within a month’s timespan. People who worked in restaurants, hotels, airlines, brick-and-mortar retail stores and within the travel industry have all been hit hard. The pain is widespread, encompassing people from all walks of life.
The Labor Department reported that the adjusted unemployment rate for the week ending April 4 was a stunning 8.2%, which “marks the highest level of the seasonally adjusted insured unemployment rate in the history of the seasonally adjusted series.”
The staggering large number of people filing for unemployment overshadows the prior record set in the midst of the financial crisis. During the Great Recession, the number of unemployed persons increased to 13.7 million in April 2009 and the unemployment rate rose to 8.9%. In 2010, the U.S. jobless rate peaked at 9.6% and started to slowly decline from there.
It took a couple of years for people to lose their jobs during the financial crisis. This time around, the number of people is larger and it has all happened at a furiously fast pace—within about four weeks.
Brian Coulton, chief economist at Fitch Ratings wrote in a research note, “April is bound to be truly shocking.” Coulton predicts that the unemployment rate may increase to about 15% in April, setting a new record—post-World War II.
State unemployment offices continue to complain that they are overwhelmed by the volume. There’s a push to hire more workers and improve the technology. It’s reasonable to believe that there are likely more people who’ve lost their jobs, but were unable to file claims due to the immense volume.
If businesses are not opened, it’s reasonable to conclude that the layoffs will continue. There are questions if people who were furloughed will return to their jobs, as their companies may not have the financial wherewithal to bring them back. With the enhanced amount of money paid in unemployment benefits, some people may postpone looking for a new job until the benefits run out or the market improves.
Only a few short months ago, the economy and job market were drastically different. Things were looking positive. America was riding high on a nonstop growth trajectory of over 100 consecutive months of increases in employment. Unemployment was at a 50-year low and the biggest worry from companies was that they couldn’t find enough people to hire for their open roles.
The positive news is that economists predict we have growing pent-up demand ready to be unleashed. Eventually, businesses will reopen. The American consumer comprises about 70% of the economy. When people start leaving their homes to shop, dine out at restaurants and take much needed getaway trips, America will return to some sort of new normalcy.