(UNDATED) – The wave of layoffs that has engulfed the U.S. economy since the coronavirus struck forced 5.2 million more people to seek unemployment benefits last week, the government reported Thursday.
Roughly 22 million have now sought jobless benefits in the past month — easily the worst stretch of U.S. job losses on record. It means that roughly one in seven workers have lost their jobs in that time.
The grim figures point to an economy that is tumbling into what appears to be a calamitous recession, the worst in decades. The nation’s output could shrink by roughly 10.5% before it starts to rebound, according to Ryan Sweet, an economist at Moody’s Analytics. That would be more than double the contraction that occurred during the 2008-2009 recession, which was the worst downturn since the Great Depression of the 1930s.
All businesses deemed nonessential have been closed in nearly every state. Deep job losses have been inflicted across nearly every industry. Some economists say the unemployment rate could reach as high as 20% in April, which would be the highest rate since the Depression. By comparison, unemployment never topped 10% during the Great Recession.
Layoffs are spreading well beyond service industries like hotels, restaurants, retail stores, and entertainment, which have absorbed the brunt of the job cuts, into white-collar professional occupations, including software programmers, legal assistants and salespeople. Workers in other occupations, like construction, are also suffering.
Up to 50 million jobs are vulnerable to coronavirus-related layoffs, economists say — about one-third of all positions in the United States. That figure is based on a calculation of jobs that are deemed non-essential by state and federal governments and that cannot be done from home.
“This crisis combines the scale of a national economic downturn with the pace of a natural disaster,” said Daniel Zhao, senior economist at Glassdoor. “And that’s really unprecedented in American economic history.”
All told, nearly 12 million people are now receiving unemployment checks, essentially matching the peak reached in January 2010, shortly after the Great Recession officially ended. That figure is less than the number of applicants in part because it lags behind the number of first-time jobless claims figure by a week. And many people who apply for unemployment aid are turned down and don’t actually receive checks.
Many of the jobless whose applications for unemployment aid haven’t been accepted are likely self-employed and gig workers. The government’s $2.2 trillion economic relief package provides jobless benefits to those groups for the first time. But most states have to set up new computer systems to process those claims — a process that could take weeks in some cases.
The rescue package also established a $350 billion loan program to small businesses, with the loans forgiven if companies retain or rehire their workers. But Michelle Meyer, chief U.S. economist at Bank of America, said that so far there’s little evidence that the program has stemmed job losses. Meyer said she thought some companies may feel that laying off workers is a better option, given that the government has added $600 to the weekly unemployment aid that states provide. The total jobless benefit could replace all or even more than a low-income worker’s normal paycheck.
On Thursday, the small-business aid program ran out of money after more than 1.6 million loans were approved, though it isn’t clear that much of the money has yet been disbursed. Members of Congress are seeking a deal for additional funding.
In recent days, economic reports have contributed to a bleak economic picture. Sales at stores and restaurants fell by the most on record in March, the government said Wednesday. U.S. industrial output fell by the most since 1946. And home building plunged 22% in March from the previous month.