Total nonfarm payroll employment fell by 701,000 in March, and the unemployment rate rose to 4.4 percent, the U.S. Bureau of Labor Statistics reported today.
The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it, said the BLS. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in health care and social assistance, professional and business services, retail trade, and construction.
More than 10 million unemployment compensation claims were filed in the last two weeks, which is just the beginning of what could be many more job losses. Most were in the service sector, where the Leisure and Hospitality sector losing the most jobs, Education and health services lost 52,000, and Transportation lost 46,200 jobs.
MarketWatch’s Jeffry Bartash said a separate survey of households gave a more accurate view of what was happening. Employment measured by the household survey showed a 3 million decline in the number of people who said they were working. And 1.6 million people just dropped out of the labor force.
Just the fact that so many service workers are being laid off will not help the recovery, since they are mostly lower-paid jobs and therefore lower-spending consumers, who keep the economy functioning on many levels. E.g., fewer transportation workers mean slower deliveries, right? It will also mean a huge hit to consumer spending, which powers some two-thirds of GDP growth.
Economic growth projections have also been down-sized, with Goldman Sachs now predicting negative GDP growth for the first three quarters of this year. Let’s hope that is all the damage.
This Wrightson graph portrays the straight-line drop of March payrolls, which almost equals that of the 2008-09 Great Recession. Let’s hope this one doesn’t last as long.
Harlan Green © 2020
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