The American economy lost more jobs than it gained for the first time in a decade.
In March, the economy shed 701,000 jobs, according to the Bureau of Labor Statistics. It was the first time the economy lost jobs in a month since September 2010, and the worst month for American jobs since the depths of the Great Recession in March 2009.
The unemployment rate shot up to 4.4%, from a near 50-year low of 3.5%. It was the highest unemployment rate since August 2017 and the largest single-month change in the jobless rate since January 1975.
Most of the job destruction took place at restaurants and bars, where the economy lost 417,400 jobs. Retailers cut 46,200 jobs and health care employment fell by 43,000 jobs as routine visits at dentists and physicians offices fell.
If there’s an ounce of good news in the March report, it’s that bulk of the layoffs were temporary: 1.8 million people were unemployed temporarily last month, up from 1 million in February.
The jobs situation could get far worse
But the labor market will probably start to look a whole lot worse starting next month.
The numbers in the jobs report come from two surveys. A survey of 60,000 households and a survey of 145,000 businesses and government agencies. Those surveys are conducted during the week including the 12th day of the month, which in this case was the second week in March. Business closures and stay-at-home orders were only just beginning that week, and didn’t really pick up steam until the week after.
The April jobs report, which won’t be released until May 8, could include the nearly 10 million Americans who filed for first-time unemployment benefits as the outbreak forced businesses to close and people to stay home.
While sectors like hospitality, tourism and entertainment were — unsurprisingly — first in facing layoffs, job losses over the next weeks will come from a wider range of sectors, said Daniel Zhao, senior economist at careers website Glassdoor.
“White collar jobs are not safe from this,” Zhao said.
In many states, people can file for unemployment benefits if they were furloughed or their hours were cut, so this doesn’t necessarily mean all 10 million people lost their jobs completely. But claims for unemployment benefits, which are released every Thursday morning, are probably a better real-time indicator of pain in the labor market than the monthly jobs report.
Normally, states decide who can file for unemployment benefits, but the government expanded these rules to include self-employed workers and independent contractors in the face of this unprecedented crisis.
Many Americans will also receive one-off stimulus checks of as much as $1,200 over the next weeks, as the government is trying to soften the blow with its coronavirus stimulus package – the CARES Act. Consumer spending is vital for the US economy, and with so many people out of work, economists are worrying about the aftermath of the virus outbreak.
The US unemployment rate could soar significantly higher, too. In the Labor Department’s monthly jobs report, people can be characterized as “unemployed” as long they are available to work, looked for a job in the last four weeks and didn’t find one. That’s regardless of whether they filed for benefits or not.
How bad could it get?
One of the worst predictions comes from the St. Louis Fed, which has predicted unemployment could rise above 30% for example. If that happens, that will be higher than in the Great Depression. The unemployment rate peaked at 24.9% in 1933, according to historical estimates from the Bureau of Labor Statistics.
Stifel chief economist Lindsey Piegza is also forecasting peak unemployment of about 30%, saying in a report Friday that “as we continue to keep the economy closed, more than 45 million Americans are expected to lose their jobs.”
The highest the unemployment rate went in the Great Recession was 10% in October 2009. The Congressional Budget Office expects the unemployment rate to climb past 10% in the second quarter, it said Thursday.
Financial markets have been leading economic data in reacting to the coronavirus crisis. US stocks sold off sharply in March, with the S&P 500 (SPX) recording its worst month since 2008. Stocks opened lower Friday following the jobs report.
“Markets have already priced in a lot and April will be another horrible month,” said Nela Richardson, principal and investment strategist at Edward Jones. “But what will happen after April? There will be a phasing in period as people return to work and the market can’t predict that.”
– CNN’s Christine Romans and Paul R. La Monica contributed to this report.