With lockdown measures in place across most states, America’s economy is facing its biggest challenge in living memory. Businesses have been hard hit, especially in consumer-focused industries. However, it’s workers who are facing the most significant losses.
The Coronavirus Pandemic has heavily disrupted the labor market. As many as two in ten American workers have filed for unemployment claims for the first time since March 15. The number of unemployed is still increasing. According to the latest data from the Department of Labor, 3.2 million Americans filed for unemployment last week.
This takes the total to 33.4 million jobless claims since mid-March. It’s the worst data ever recorded by the Department of Labor. Unemployment represents around 21% of the total labor force.
Fewer People Are Being Called Back to Work
Economists who have interpreted the data believe that it suggests workers aren’t being recalled to work, despite some parts of the economy starting to reopen. As more states relax their lockdown orders, the labor market should start to bounce back.
The government is intervening to reduce the economic impact and keep people afloat during the health crisis. Eligibility criteria for unemployment benefits have been relaxed, allowing contractors, self-employed professionals, and gig economy workers to make jobless claims. According to the Department of Labour, every state is now paying benefits for these workers.
Some states are feeling the impact worse than others. Kentucky, with its large manufacturing industry, has said that up to 33% of active participants in its labor force filed for unemployment in the last seven weeks. Hawaii’s tourism industry has been heavily impacted by a slowdown in global travel, leading to claims representing over 30% of its labor force. Georgia is another state where new unemployment claims are equivalent to over 30% of its labor force.
What’s Coming in the Next Jobs Report?
The Bureau of Labor Statistics will release its official April jobs report before the beginning of next week. Job losses are expected to be as high as 22 million, with an unemployment rate of 16%, making it the worst period of layoffs in history.
While stock markets are showing signs of recovery, investors should not underestimate the lasting damage that the Coronavirus will have on the economy. Stock picks should be carefully analyzed for growth potential and industry strength. Job losses and a reduction in consumer spending should be considered when evaluating consumer-facing companies.
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