Daily Management Review

Job Loss For One In Four Workers In US Since Mid-March Due To Pandemic


Job Loss For One In Four Workers In US Since Mid-March Due To Pandemic
While there is evidence that the worst outcome for the United States labor market could have passed, the tremendous amount of ground the labour market of the country has to cover in order reach pre-crisis levels is also becoming evident with every new bit of data and with each new batch of jobless claims.
According to the US Department of Labour, in the week ending May 23, about 2.1 million Americans filed initial jobless claims. That put the total number of people filing for unemployment benefits since mid-March at well above 40 million.
That meant about one in four adult workers in the US had become jobless since the spread of the novel coronavirus pandemic spread across the country with containment measures and shut down orders for businesses to prevent the spread of the pandemic. The entire of the US economy was brought to a standstill. 
The numbers of unemployment are still historically high even though there has been a slow down in the pace of weekly job losses compared to a peak in March with 6.9 million applications.
However the official data based on the number of American filing for unemployment benefits does not reveal the true picture because the headline numbers do not capture a host of workers such as the gig workers and the self-employed.
However, in the week ending May 2, there was a decrease in the number of people already collecting unemployment benefits which came in at 21 million people. That denoted a drop of 3.86 million claims compared to the previous week.
"The drop in continuing claims suggests labour market conditions are now beginning to improve again as workers are recalled to their jobs, either because their employer has received funds through the Paycheck Protection Program or because businesses have reopened," Michael Pearce, senior US economist at Capital Economics wrote in a note to clients.
Coronavirus lockdown measures have been started to be scaled back by all 50 US states and economic activities have started which includes consumer spending that accounts for about one third of the total gross domestic product of the country.
Despite this however, analysts believe that there is a long time left for the employment numbers to reach pre crisis levels.
"It will be years until the unemployment rate returns to pre-virus levels, but with most of the layoffs temporary, we expect the labour market to recover faster than usual, with the unemployment rate below 10% by the end of the year," wrote Pearce.
Another glimpse of the economic damage wrecked by the coronavirus lockdowns was seen in the revised estimate figures for first-quarter US economic growth that was released on Thursday. There was a downward revision of the US gross domestic product (GDP), the combined measure of the value of all goods of services produced in the country within a certain time period, which indicated that the economy shrank 5 per cent in the first three months of the year. The initial prediction was for a contraction of 4.8 per cent.
"The worst is yet to come in Q2 with a near-40% GDP plunge," said Oxford Economics senior US economist Lydia Boussour in a client note.  She added: "Given the magnitude of the shock, the Global Coronavirus Recession is all but certain to leave a scar on the US economy.