It could take many years for America’s jobs market to recover from this shock

Experts say it may take a few years, or even longer, to return to unemployment before the crisis. Even though some jobs will come back quickly when states reopen their economies, many others may be gone for a while. Some jobs may never come back.

"Although the shock has been severe and rapid, the healing process will take much longer," said Danielle DiMartino Booth, CEO and chief strategist for Quill Intelligence.

The stunning loss of 20.5 million jobs in the United States is easily the biggest decline in a month since the government began tracking the data in 1939. Unemployment rose to 14.7% in April, the highest since the Great Depression. It is quite high from just 3.5% in February and 4.4% in March.


Even relatively optimistic economists told CNN Business that the job market will not fully recover by the end of next year.

"There has just been too much damage to come back so quickly," said Ethan Harris, head of global economics research at Bank of America.

"Too much damage"


The White House even acknowledges that the carnage is not complete.

Kevin Hassett, senior financial adviser to President Donald Trump, told CNN's Poppy Harlow on Friday that unemployment is likely to hit 20% in May.


Hassett called the mass resignations "heartbreaking" because "every unemployed person is a person whose life is now in turmoil."

By the end of 2020, Bank of America expects unemployment to fall to 9.6%. There are still a very high number, almost equal to the worst months of the Great Recession.

The big concern is that until it is a vaccine, not many Americans will go to restaurants, concerts, stadiums or do anything involving a crowd.

"People want to self-regulate. Just because your governor says you can step out doesn't mean you want to do it," Harris said.


Bank of America expects unemployment to decline to 7.5% by the end of 2021 and will not reach the crisis until 2022.


JPMorgan: It can take ten plus years to recover

Gus Faucher, chief economist at PNC, sees a slower recovery where a return to healthy levels of 4% or 5% unemployment does not happen in three or four years.

And while unemployment may fall sharply, he said, there are likely to be pockets of unemployment for years in areas of the economy that are most sensitive to the pandemic.

"It's going to be lasting job losses," Faucher said, especially in the entertainment industries. "We're going to see a structurally smaller retail industry. Many small businesses – despite the Paycheck Protection Program – will go bankrupt. And there will be permanent changes in travel and tourism."

Still others warn of an even more drawn improvement.

"To get back to near 3.5% unemployment, you're talking ten-plus years with some kind of rational modeling," Bob Michele, chief investment officer at JPMorgan Asset Management, told CNN Business.

He noted that after the Great Recession, the United States took six years to return to 5% unemployment following the Great Recession. And it took another three to four years to reach 3.5% unemployment.

"People think it's going to be a V-shaped recovery. We just don't see it," Michele said. "It will take a while for unemployment to come down to something that is reasonable."

Health response is critical

If there was a silver lining in the work report, it was that 18 million people indicated that they expect to be practiced by their employer. This suggests that many workers are optimistic about the road ahead.

"Prophecies like that can be self-fulfilling," said Hassett, the White House economist, adding that the figure "surprised the heck for me."

These coronavirus losses will be permanent
But there were other alarming trends. U6 unemployment, which captures the percentage of Americans who want a job but have given up trying to find one, rose to 22.8% in April. That's up from just 8.7% the month before.

Hassett told CNN that this rate could go even higher, hitting 25% before "hopefully" falling after a transitional period this summer.

Economists emphasized that the damage to the labor market shows why it is so critical for public health authorities to get the pandemic under control. They asked for a robust startup in coronavirus testing and detection.

"If you do not have tracking and testing, this recovery will be very small," said Bank of America's Harris. "People need to know that the disease does not run high. That effort, which has been hanging around, is absolutely critical."

Want Americans to use as before?

It is not only the health crisis that can change consumer behavior.

The shocking rate of the economic shock could persuade Americans who were once willing to use aggressively to hunt down.

"For the first time in our lifetime, American families have been faced with the reality of not saving for a rainy day," said Booth, CEO of Quill Intelligence and a former Federal Reserve official.

Already, the US savings rate increased to 13.1% in March the highest level since the end of 1981. It's a big deal because more than two-thirds of the US economy is driven by consumer spending.

"If there's a new frugality when we come out of this crisis," Booth said, "the economy is in a rude awakening."

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