The American economy lost 701,000 jobs in March and the unemployment rate rose to 4.4%, the government said this Friday, in a report that does not yet reflect the full impact of the huge decline in the labor market registered in the past two weeks in the middle of the pandemic of coronavirus.
–
This data disclosed by the Department of Labor only includes what happened in the labor market until approximately mid-March. That means that the official figure, for the moment, does not reflect the blow of the almost 10 million people who had to ask for unemployment benefits in the past two weeks amid wide closings of schools, businesses, restaurants, and retail stores.
–
The figure, however, yes it begins to show the devastation that is causing the covid-19 in the economy of the United States, which is expected to show a deep contraction in the second and third quarters of this year.
–
The unemployment rate rose from the historically low 3.5% of the previous report, when the labor market was solid and the shock of the spread of the coronavirus in the country was unthinkable. It was also the highest monthly increase since January 1975, when there was also a rise of 0.9 percentage points.
–
On the non-farm payroll numbers side, the 701,000 drop was the first since 2010, ending a long streak of labor market expansion.
–
This “reflects the impact of the coronavirus and efforts to contain it. Jobs in the hospitality and related services sector fell by 459,000, mainly in food and beverage services,” the government explained in a statement.
–
“Notably, there were also falls in the health and social care, business and professional services, retail and construction sectors,” he added.
–
The brutal blow will be seen in May
The unprecedented scenario that has occurred after the declaration of a national emergency and while local governments have asked millions to stay home will be more evident in the next monthly report in May.
–
That report, in addition to taking into account the almost 10 million people who have applied for unemployment benefits, must include the recent loss of thousands of jobs in retail giants.
–
Analysts at Oxford Economics predicted that the next report will reveal the loss of at least 20 million jobs, a number that would far exceed the record of 800,000 jobs in March 2009, the Reuters agency noted.
–
Beyond May, the rapidly deteriorating US job outlook would continue longer and official numbers would remain bleak. The unemployment rate would rise to double digits by the middle of the year. The Congressional Budget Office (CBO) estimated that it would be around 12% in the second quarter.
–
“The magnitude of (the measures of) social distancing was a key factor in this projection. The analysis incorporates that this persists across the country, on average and with some local variations, for the next three months,” said the CBO.
–
