Coronavirus: Pandemic sends US jobless rate to 14.7%

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New York, the financial capital of the USA, is also one of the critical points of the coronavirus in the USA.

The US unemployment rate rose to 14.7%, with 20.5 million jobs lost in April, with the coronavirus pandemic devastating the economy.

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The increase means that the unemployment rate is now worse than at any time since the Great Depression of the 1930s.

Since the start of the pandemic, the United States has experienced the worst growth figures in a decade and the worst retail sales report ever recorded.

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Just two months ago, the unemployment rate was 3.5%, a 50-year low.

"It's historically unprecedented," said economist Erica Groshen, a former head of the government's Bureau of Labor Statistics, who now teaches at Cornell University. "We put our economy into a medically induced coma to cure it of the pandemic … and that led to the most precipitous job loss seen in any modern data."

The Department of Labor report showed declines in all sectors of the economy.

Leisure and hospitality were particularly affected, with a drop of 7.7 million or 47% in payrolls. Employers in education and health services cut 2.5 million jobs, while retailers lost 2.1 million.

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The Labor Department said that more than three-quarters of the unemployed consider themselves temporarily laid off, a sign that many of those currently out of work hope the economy can recover.

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But economists have warned that the pandemic is likely to force major business changes – such as limits on how many people can be in a restaurant at the same time – that could reduce the need for workers. And the longer the shutdown lasts, the more likely a company will not survive.

"Even a temporary layoff can turn into a permanent one if the company doesn't survive or if it needs to change its business model so dramatically that it needs different numbers or a different type of worker," said Groshen.

The economic crisis is not exclusive to the USA. In the United Kingdom, the Bank of England warned of the sharpest recession on record, while Canada reported on Friday that its unemployment rate rose 5.2 percentage points to 13% last month.

Statistics Canada estimated that about a third of the workforce was unemployed or worked less than half of normal hours.

In an appearance on Fox News, U.S. President Donald Trump has shrunk the 20.5 million jobs lost in the U.S. as "totally expected" and "unsurprisingly."

"Even Democrats are not blaming me for that. What I can do is give it back," he said when the figures were released.

But bankruptcies have already claimed retailers like J Crew and Neiman Marcus, as well as many energy companies, where a collapse in oil prices, due in part to a drop in pandemic-related demand, has worsened tensions.

Although some states have already begun to relax restrictions, restarting the economy is likely to be difficult as workers worry about the risk of infection and struggle with the impact of school closures.

"I'm not sure what's going to happen next," said Tanya Nikolaevskaya, a legal assistant in New York, who was stolen last month after working from home in March.

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The unemployment rate for black workers is the highest since 2010 and is at a record high among Hispanics

Nikolaevskaya hopes to return to what she described as her dream job, but she has a medical condition that worries her about the infection and is a single mother, whose 8-year-old daughter will need care if schools do not reopen.

"It is about 'child care there'," she said. "If I don't have childcare, I won't be able to go back."

The number of people in the workforce – working or looking for a job – fell 2.5% last month, to the lowest level since 1970, while those who reported reduced hours or the inability to find a full-time job almost doubled.

The Labor Department warned that the situation may be worse than estimated, pointing to an increase in the number of people who said they were employed but "absent from work". The inclusion of these responses suggests an unemployment rate closer to 20%, he said.

Among black workers, the unemployment rate jumped to 16.7%, the highest since 2010. Among Hispanics, it rose to a record 18.9%, while it rose to a lower – but still record – 14.2% among white workers.

Overall, the unemployment rate was the highest recorded in data since 1948, while the decline in jobs in the month was the highest recorded in data since 1939.

"The scale of the challenge cannot be overstated," said Robert Alster, head of investment services at wealth manager Close Brothers Asset Management.

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