In April, the U.S. unemployment rate grew to 14.7%, the worst since the Great Depression. In May, the unemployment rate growth was not as high as analysts predicted, and it seems the worst is probably behind.
By Darya Rudz
Updated
3 mins read
The coronavirus pandemic led to unbelievable historic levels of unemployment, with the peak reached in March and early-April. In April alone, companies laid off 19.557 million workers. On Friday, the unemployment rate for May will be released. Economists expect it to be around 20%, up from 3.5% in February. According to the ADP National Employment Report, in May, businesses cut about 2.8 million jobs. But as this number is lower than 8.75 million that analysts expected, some see signs of recovery and believe that the bottom of the COVID-19 recession has been hit.
Among those who hold such an opinion are Moody’s economists. For example, Moody’s Analytics economist Mark Zandi believes the COVID-19 recession has lasted for three months and we are “in recovery” now. He said:
“It will be the shortest recession on record, but it will be among the most severe.”
Further, Zandi added:
“The good news is I think the recession is over, the Covid-19 recession is over, barring another second wave, a major second wave, or real serious policy errors. The bad news is that the recovery will be a slog until there’s a vaccine or therapy that’s distributed and adopted widely.”
Over the past three months, a staggering 25 million private jobs were lost. In April, the U.S. unemployment rate grew to 14.7%, the worst since the Great Depression. In May, the unemployment rate growth was not as high as analysts predicted, and it seems the worst is probably behind. However, economists anticipate numerous bankruptcies and say there is no evidence of the government’s Paycheck Protection Program (PPP) helping the labor market.
Ahu Yildirmaz, co-head of the ADP Research Institute, stated:
“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes. While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”
Mark Zandi estimated that the COVID-19 recession has badly affected 50 million Americans. He said:
“The job loss is abating. Layoffs appear to have peaked in late March and early April and they were winding down by early May. I would expect job growth to resume in June.”
According to Zandi, the unemployment rate will top out above 20% in general. The Federal Reserve’s prediction is much worse: its estimate totals 32%.
The entertainment, tourism, trade industries suffered most. For example, manufacturers laid off 719,000 employees in May. The trade, transportation and utilities sector cut 826,000 jobs. Hotels and restaurants cut 105,000 jobs last month.
Find out more coronavirus updates here.
Darya is a crypto enthusiast who strongly believes in the future of blockchain. Being a hospitality professional, she is interested in finding the ways blockchain can change different industries and bring our life to a different level.
