The report highlights the speed and scale of the labor market collapse as the coronavirus pandemic wreaked havoc. The unemployment rate in February was 3.5%, a low of half a century. And even since the survey was carried out, millions of people have filed for unemployment benefits.
Job losses in April far exceed the 8.7 million people recorded in the last recession, when unemployment peaked at 10% in October 2009. The only comparable period occurred when the rate reached about 25% in 1933, before the government started to publish official statistics.
If anything, the report minimizes the damage. The government’s definition of unemployment generally requires people to be actively looking for work. And the unemployment rate does not reflect the millions of people who are still working and who have had their hours reduced or their wages reduced.
Many unemployed workers said they had been temporarily laid off and had to return to work. But unemployment that started with layoffs in the hospitality and hospitality industry spread to the economy as a whole, from manufacturing and retail industries to white collar redoubts like services businesses, which means it will take longer for the labor market to recover.
But in an interview with Fox News on Friday, President Trump predicted that the economy would return to roar after the “artificial” closure.
“These jobs will all be back and they will come back very soon,” said Mr. Trump, “and next year we are going to have a phenomenal year.”
For Hispanic or Latino workers, the unemployment rate jumped to 18.9%, up from 6% in March and the highest ever recorded since the 1970s. This compares to an overall unemployment rate of 14.7% for the nation and at an unemployment rate of 14.2% for white workers.
The numbers are striking because job gains among minorities, and black workers in particular, were a major bright spot in the record expansion that preceded the shutdown of the US coronavirus. The group’s record unemployment rate had become a talking point for President Trump and key Federal Reserve officials.
“We heard from a minority of low and moderate income people and from minority communities that it was the best job market they had seen in their lifetime,” said Jerome H. Powell, President of the Fed, during his press conference on April 29. “It is heartbreaking, frankly, to see that everything is threatened now.”
And Friday’s employment report – which showed that a total of 20.5 million jobs were lost in April – had even worse news about the impact of the pandemic on minorities. A measure of the employment / population ratio showed that some minorities have left the labor force entirely and therefore have not been counted among the official “unemployed”. The employment rate compared to the population of black Americans fell to 48.8% in April, corresponding to a low of 1982. Only 51.3% of the Latino adults were employed in April, the lowest ever recorded.
While white workers have also lost large numbers of jobs, history suggests that significant losses among minority groups are cause for concern. Racial and ethnic minority groups have a disproportionately high proportion of low-wage workers and are particularly vulnerable to economic downturns. They are often the first to be laid off and group unemployment rates are increasing.
While tens of millions of Americans lost their jobs in April, 78.3% of them filed for separation as a temporary layoff, while 11.1% said their situation was permanent.
This is an unusually high proportion of people on temporary layoff, and this could be good news for the economy. Temporary layoffs accounted for only 26.5% of job losses in March and 13.8% in February. In fact, the share was at an all time high in records dating back to the 1960s.
Short-term job losses suggest that hiring may come back quickly when businesses reopen. According to Goldman Sachs, recessions in the past half century, with a higher share of temporary layoffs, have been followed by faster job pickups.
A higher temporary share “would increase the chances of a faster labor market recovery when the economy finally rebounds,” Goldman Sachs wrote before the employment report on Friday.
But there is an important caveat: temporary layoffs can always become permanent later, if the economic situation deteriorates.
Why has the unemployment rate increased less than what economists expected?
Part of the answer may be “measurement error”.
In April, almost 9 million workers said they were employed but absent from work for “other” reasons – that is, not because they were sick, on vacation, or for other reasons. typical reasons for absence. This is about 7.5 million more people than a typical April.
The Ministry of Labor said on Friday that many of these people should probably have been registered as “unemployed”. And if they had been, “the overall unemployment rate would have been almost 5 percentage points higher than that declared” – or almost 20%.
The issue highlights how standard economic measures are struggling to reflect the unusual nature of this crisis. The Labor Department is trying to accommodate itself, including sending special instructions to its investigators to register those unemployed because of the virus as being on temporary layoff. But Friday’s figures suggest there are still significant data problems.
The S&P 500 rose by around 1% at the start of the session. European markets advanced after a largely positive day in Asia.
Investors were encouraged by the prospects of reopening their economies, despite the fear that these efforts would cause an increase in infections. They were also bolstered by announcements from the U.S. and China that appeared to support their Phase 1 trade deal, which would temporarily end their two-year trade war. The White House had openly questioned China’s commitment to the deal in recent days, which had hurt stocks.
Optimism was widespread. The prices of US treasury bills, which generally increase in times of crisis, fell on Friday morning. Oil prices have also risen.
But darker economic data was released on Friday. In the United States, the April payroll report reveals a loss of more than 20.5 million jobs – a breathtaking decline – and a sharp increase in the unemployment rate. Corporate earnings reports also reflect the heavy toll of the pandemic. Siemens, the European industrial giant, said profit fell 64% in the first quarter.
China and the United States announced Friday that they have held high-level trade talks. And despite Washington’s increasingly harsh rhetoric on trade, senior trade officials from both countries appear to be reaffirming the Phase 1 trade agreement they signed in January, which led to a truce in their trade war. almost two years.
“The two sides agreed that satisfactory progress is being made in creating the government infrastructure necessary for the success of the agreement,” said the office of the US trade representative. “They also agreed that despite the current global health emergency, the two countries fully expect to meet their obligations under the agreement in a timely manner.”
President Trump rocked the financial markets on Wednesday by promising to examine by the end of next week whether China is meeting its obligations under the agreement to increase purchases of US goods.
China has imported more American food products since the pact was signed. But overall imports of American products from China fell short of the administration’s initial hopes, as the coronavirus pandemic damaged Chinese consumer spending and investment.
The agreement itself set import targets for two years, but not quarterly targets along the way. The statement from the office of trade representatives on Friday was less confrontational with China than other recent statements by the administration.
Chinese Vice Premier Liu He of China held a conference call with Robert Lighthizer, sales representative and treasury secretary Steven T. Mnuchin, the two countries said.
“The two sides said they should strengthen macroeconomic and public health cooperation, strive to create an atmosphere and conditions conducive to the implementation of the first phase of the China-US economic and trade agreement, and promote positive results, “said the Chinese Ministry of Commerce. said in a statement.
Li Mingqin’s factory in central China makes happy times products, using chicken feathers and other poultry to produce masquerade masks and badminton shuttlecocks. But with the pandemic, new orders have been stopped and she, like many other small business owners, is wondering how she will survive.
It has more than 100 employees it has not paid for a month and which it promises to pay in June. She has hundreds of thousands of dollars worth of feathers and other supplies stacked in a warehouse.
While China has almost completely eliminated local transmission of the coronavirus, its financial regulators are working to help the country’s small businesses get through the current crisis. global collapse in consumer demand. Commercial banks are now free to lend small businesses some of the money they previously had to park with the central bank. Regulators call bank managers daily to tell them to roll over small business loans.
Borrowers who miss payments on bank loans are not penalized on their credit history if they can find the money later. Companies that agree not to lay off are eligible for additional loans.
But to use all this credit, you must have a banking relationship. The banks deal mainly with public companies and some large private companies. Companies like Ms. Li’s, the Gelan handicraft factory in Anhui Province, have struggled to obtain bank loans. Instead, they depend mainly on borrowing from friends and relatives, many of whom are now facing their own financial difficulties.
Ms. Li fired her nanny and started to cook for herself.
“My husband and I are under a lot of pressure and often can’t sleep through the night,” she said, worried about the factory. “I don’t know the future. I’m so confused. I don’t know how long it can last.”
A confrontation between Amazon and French unions over security measures for the coronavirus intensified Thursday when the company said it would ask the highest court in France to overturn a Last week, the appeals court ordered the e-commerce giant to stop delivering non-essential items to the country during the pandemic to protect workers.
Amazon will also seek approval on Friday from works councils, which represent around 10,000 employees, to keep its six gigantic French warehouses closed until May 13, while it consults them on measures to be taken to further strengthen measures to security against the virus.
“We are working hard to resume business as usual for our French customers, French employees and French sellers,” Amazon said in a statement.
Amazon’s warehouses in France have been closed for almost a month since a court sided in mid-April with unions who had sued the company, accusing it of inadequately protecting workers against the threat of the virus and for not consulting the unions on the measures, as required by law. The court ruled that Amazon should restrict supplies to food, hygiene and medical products only until it resolves the problem, or incur millions of euros in potential fines.
Rather than risk punishment, Amazon put its workforce on paid leave, but it continues to deliver items in France from its centers in Belgium, Germany and Spain. The company criticized unions for bringing the lawsuit, which was confirmed by the Versailles Court of Appeal last week. Amazon insists that it has maintained strict health security on its French sites and has accused unions of seeking to promote their own interests amid the health crisis.
Catching up: here’s what else is going on.
Perhaps Europeans could still save something from the summer. German airline Lufthansa announced Friday that it will resume flights next month to popular European holiday destinations such as the Mediterranean islands of Mallorca and Crete, and Sylt in the North Sea. From June 1, Lufthansa will double the number of planes in service, to 160. To minimize the risk of contagion, passengers will have to wear masks on board, the airline said.
The electronics and engineering giant Siemens, a harbinger of the German economy, said first-quarter profit fell more than half due to the drop in new orders. Siemens, which manufactures a diverse line of products, including high-speed trains, wind turbines and medical scanners, said sales were down a modest 1% from the first quarter of 2019. But new orders, an indicator of future sales, fell 9 percent largely due to lower demand for passenger trains. Profit fell 64%.
J.C. Penney and Sephora, who had argued in court over a potential closure of Sephora mini stores in hundreds of J.C. Penney stores, said Thursday that they had “reaffirmed their longstanding partnership”. J.C. Penney had filed a complaint Monday describing the disagreements between companies, which have been partners since 2006, and highlighted the challenges that many retailers may encounter with sellers as they try to resume their activities during the pandemic.
Frontier Airlines has become the first US carrier to announce its intention to take passenger temperature before boarding, a decision that would take effect on June 1. Anyone with a temperature of 100.4 degrees or more will be denied boarding.
The Walt Disney Company said the 120-acre Disney Springs, one of the largest shopping malls in the United States, will begin a gradual reopening on May 20. The lakeside property on the outskirts of Orlando, Florida, has approximately 170 stores and restaurants. Disney theme parks and hotels will remain closed. Disney said the reopening of Disney Springs would involve masks for employees and guests and capacity limitations.
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