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Coronavirus US: At least 33 million file for unemployment

JP Morgan’s Bob Michele has said it will take between 10 to 12 years for US employment levels to get back to where they were before the coronavirus outbreak.

Michele, the bank’s Chief Investment Officer, also warned that any recovery efforts won’t be as simple as just turning the economy back on either.

Nearly 3.2 million more laid-off workers applied for unemployment benefits last week as shutdowns caused by the ongoing pandemic deepened the worst US economic catastrophe in decades. 

At least 33.5 million people have now filed for jobless aid in the seven weeks since the outbreak began, forcing millions of companies to close their doors and bringing the US economy to a near standstill.  

‘No, it’s not that simple … it’s going to take years, or longer to get back to where we are, or where we were,’ Michele warned on Bloomberg.

JP Morgan’s Bob Michele has said it will take between 10 to 12 years for US employment levels to get back to where they were before the coronavirus outbreak.

At least 33.5 million people have now filed for jobless aid in the seven weeks since the outbreak began, forcing millions of companies to close their doors and bringing the US economy to a near standstill

At least 33.5 million people have now filed for jobless aid in the seven weeks since the outbreak began, forcing millions of companies to close their doors and bringing the US economy to a near standstill

Michele also said the congressional budget office have made huge errors when predicting unemployment levels and likened the current crisis to the 2008 financial crash.

‘When you look at the congressional budget office forecast for the end of 2021, they have unemployment at 9 percent, so sure, materially better than where we’re going to peak in the high teens, but during the peak of the financial crisis, unemployment hit 10 percent,’ he said. 

‘So even looking out a year and a half from now, we’re still going to be roughly where we were at the peak of the financial crisis.’

The banking executive further questioned what will happen when the Paycheck Protection Program (PPP) runs out of funding, and said he believes that when the economy does eventually reopen, Americans will not be spending at the same rate they did before the pandemic – prompting another round of layoffs.

‘One of the things we did was to just predict a downdraft in the second quarter, somewhere around 10 percent, so call it 38 to 40 percent annualized, and say that’s the trough, and then start this journey back up to the long-term trend rate,’ Michele explained. 

‘To catch up to the long-term trend rate that’s been in place, call it 1.5 percent, pre-crisis, to fill that output gap, we estimate it will take ten to twelve years.’

According to a Labor Department report released on Thursday, there were 3.2 million new claims for unemployment benefits filed in the week ending May 2. More than 30 million sought aid in the previous six weeks starting in mid-March. 

Most nonessential businesses remain shut down but the majority of states are beginning to ease restrictions for some categories of companies despite concerns that it may be too soon to do so without accelerating new infections. 

The unemployment benefit figures marks the fifth straight weekly decrease in applications since hitting a record 6.867 million in the week ended March 28. 

There were 3.2 million new claims for unemployment benefits filed in the week ending May 2, according to a Labor Department report released on Thursday

There were 3.2 million new claims for unemployment benefits filed in the week ending May 2, according to a Labor Department report released on Thursday

At least 33.5 million people have now filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors, bringing the US economy to a near standstill

At least 33.5 million people have now filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors, bringing the US economy to a near standstill

‘The pace of new claims for unemployment is slowing, but remains at levels unimaginable just a few months ago,’ said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.

‘Even with the economy slowly starting to reopen, the number of unemployed should continue to rise sharply as governments, as well as businesses that have tried but not succeeded at holding the line, are now laying off workers.’ 

The latest weekly claims data will have no impact on the government’s April jobs report, due out on Friday, because it falls outside the period during which the government surveyed establishments and households for its monthly report. 

The monthly unemployment report is likely to be the worst since modern record-keeping began after World War II. 

The unemployment rate is forecast to reach at least 16 percent – the highest rate since the Great Depression of the 1930s. 

Economists are estimating that 21 million jobs were lost last month, which would mean that nearly all the job growth in the 11 years since the Great Recession ended has vanished in a single month.   

Even those stunning figures won’t fully capture the magnitude of the damage the coronavirus has inflicted on the job market. Many people who are still employed have had their hours reduced, while others have suffered pay cuts. 

Some who lost jobs in April and didn’t look for a new one in light of their bleak prospects won’t even be counted as unemployed.   

Stocks open higher as acceleration of economic pain eases 

Stocks climbed in early trading on Wall Street Thursday as reports suggested that even though the economy is still suffering severely, the pace of pain may be decelerating. 

The S&P 500 rose 1.3%, following similar gains in Europe. 

The day’s headliner economic report showed another 3.2 million U.S. workers applied for jobless benefits last week, bringing the total over the last seven weeks to 33.5 million. 

It’s a shocking number, but it’s also the fifth straight week of decline since hitting a peak in late March. 

Several companies including Lyft and PayPal said they were seeing some encouraging trends in their businesses. 

Minneapolis Federal Reserve Bank President Neel Kashkari says the monthly employment report is likely to understate the number of jobs lost during the pandemic because many people haven’t been actively looking for new work due to stay-at-home orders across the US. 

Kashkari, asked what the jobs report might show during an interview on NBC’s Today, said the reported unemployment rate could be as high as 17 percent, but the true unemployment rate may be as high as 23 percent. 

‘That bad report tomorrow is actually going to understate how bad the damage has been,’ he said.  

Despite the stark forecast, Kashkari said he was hopeful policymakers could avoid a depression scenario for the US economy after learning lessons from the Great Depression of the 1930s.

‘The Federal Reserve is acting aggressively, we will continue to act aggressively,’ he said.

Still, Kashkari said the economic rebound was likely to be ‘gradual’ until there was the development of a vaccine or therapy to treat the virus.

He said it could be a while before consumers feel comfortable sitting in a full movie theater or a crowded restaurant and many restaurants may struggle to make ends meet if they are only serving half as many customers. 

‘Unfortunately, the recovery looks like it is going to be slow,’ he said. 

The official figures for jobless claims may also be under-counting layoffs. 

Surveys by academic economists and think tanks suggest that as many as 12 million workers who were laid off by mid-April did not file for unemployment benefits by then, either because they couldn’t navigate their state’s overwhelmed systems or they felt too discouraged to try.  

Minneapolis Federal Reserve Bank President Neel Kashkari says the monthly employment report due out Friday is likely to understate the number of jobs lost. He is predicting that the real number is around 24 percent

Minneapolis Federal Reserve Bank President Neel Kashkari says the monthly employment report due out Friday is likely to understate the number of jobs lost. He is predicting that the real number is around 24 percent

US businesses cut an unprecedented 20.2 million jobs in April, an epic collapse with coronavirus outbreak closing the offices, factories, schools, construction sites and stores that propel the US economy

US businesses cut an unprecedented 20.2 million jobs in April, an epic collapse with coronavirus outbreak closing the offices, factories, schools, construction sites and stores that propel the US economy

The latest figures come after it was revealed that private payrolls fell by an unprecedented 20.2 million in April. The report from payroll company ADP showed the tragic depth and scale of job losses (above) that left no part of the world's largest economy unscathed

The latest figures come after it was revealed that private payrolls fell by an unprecedented 20.2 million in April. The report from payroll company ADP showed the tragic depth and scale of job losses (above) that left no part of the world’s largest economy unscathed

Hispanics are nearly twice as likely to lose jobs compared to Caucasians, polls finds  

A Washington Post-Ipsos poll has found 20 percent of Hispanics are being laid off amid the coronavirus pandemic. 

The poll also indicates 16 percent of black people have reported loosing their jobs. 

It compares to the 11 percent of Caucasian workers and 12 percent of other races.  

22 percent of Hispanic men and 18 percent of Hispanic women say they’ve been fired or furloughed amid the pandemic. 

The poll also found that younger and blue-collar workers were most likely to have been laid off. 

As the economy slides further into what looks like a severe recession, economists are projecting that the gross domestic product – the broadest gauge of economic growth – is contracting in the current April-June quarter by a shocking 40 percent annual rate. 

As it does, more layoffs appear to be spreading beyond front-line industries like restaurants, hotels and retail stores. 

The latest figures come after it was revealed that private payrolls fell by an unprecedented 20.2 million in April.

The report from payroll company ADP showed the tragic depth and scale of job losses that left no part of the world’s largest economy unscathed. 

According to ADP, the leisure and hospitality sector shed 8.6 million workers last month. Trade, transportation and utilities let 3.4 million people go. Construction firms cut nearly 2.5 million jobs, while manufacturers let go of roughly 1.7 million people. 

The health care sector cut 1 million jobs, but education services eked out a gain of 28,000 as colleges and universities do not appear to have forced significant layoffs that could come later this year. 

More than half of April’s job losses came from smaller companies with 500 workers or fewer but larger employers cut 8.9 million jobs.  

The losses will likely continue through May with a recovery in hiring likely to begin in the months that follow, according to Mark Zandi, chief economist at Moody’s Analytics.

‘This is one for the record books,’ Zandi said. ‘The good news is that we’re at the apex of the job loss.’

Even though Zandi expects hiring to resume in June as states ease lockdowns, he cautioned that it will be a ‘slog’ over several years to recover all the jobs lost in April.

Data is showing that declining cases in hard-hit New York are driving the national trend downwards when more than a third of states are actually still seeing infections increase

Data is showing that declining cases in hard-hit New York are driving the national trend downwards when more than a third of states are actually still seeing infections increase

Read more at DailyMail.co.uk


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