Unemployment skyrocketed in April according to information just released by the Labor Department. Over 20.5 million jobs were lost last month, pushing the unemployment rate to 14.7%, a number far higher than any seen since the Great Depression.
The American economy has been hit hard by the coronavirus outbreak and the resulting business closures brought on by stay-at-home orders and safety concerns across the country. In March, when the United States truly began feeling the effects of COVID-19, over 700,000 jobs were lost, resulting in a 4.4% unemployment rate that already caused the greatest one-month jump (up from 3.5%) since 1975.
But April’s numbers are an almost unprecedented blow for the economy.
The 2009 recession only saw unemployment get as high as 10%, while the 1982 recession reached 10.8%. Prior to this year, those were the only two recessions since the 1930s where unemployment reached double digits. By comparison, the Great Depression saw an unemployment rate maxing out at 24.9%.
The loss of jobs brought on by the pandemic began with service industries like hotels and restaurants, but the ripple effect has continued to spread throughout various industries as Americans become more cautious about spending money, businesses alter their own spending patterns, and stores remain closed in certain parts of the country.
As a result, millions of people have applied for unemployment in the last two months, and those numbers may not include the numerous folks who have had their hours or pay reduced due to the health crisis.
One positive note is that many of the unemployed are reporting their loss of work as temporary.
The U.S. Bureau of Labor Statistics reports that only 11.1% of unemployed Americans reported their job loss as permanent in April, while 79.4% said it was temporary.
These numbers likely reflect the fact that many businesses are hoping to reopen as soon as possible, and rehire staff as they are able.
Whether or not the people who believe their unemployment to be temporary are proven correct remains to be seen, as we don’t yet know how long we will be dealing with the economic fallout from COVID-19, or if reopening businesses prematurely will result in a second wave of infections and new stay-at-home orders.
The high unemployment rate is a blow for the Trump administration.
Trump has repeatedly taken credit for unemployment being at a 50-year low of 3.5% prior to the current crisis, a statistic that failed to account for the labor force participation rate also being at a low 63.4%. It was expected to be a selling point for his 2020 reelection campaign, but now that may be in jeopardy.
While the occurrence of the novel coronavirus outbreak was not something that could have been outright stopped by the federal government, Trump’s mishandling of the situation, particularly in those key early days of the outbreak, is believed to have resulted in a far greater death toll and economic blow than we may have seen with a leader who took the threat seriously.
Instead, a lack of preparedness, inadequate testing that still persists into May, and a failure to coordinate isolation efforts across the country have resulted in a situation where states are beginning to allow businesses to reopen despite confirmed COVID-19 cases still being on the rise in many locations.
The human and economic impact of these decisions remains to be seen, but the chaos of it all doesn’t inspire hope, despite Trump’s empty promises that everything will soon be back to normal.
“Those jobs will all be back and they’ll be back very soon,” he said on Fox News, “and next year we’re going to have a phenomenal year.”
Let’s just try to make it through 2020 first.