US jobless rate soars to 14.7%

The US unemployment rate hit 14.7% in April, the highest since the Great Depression, as 20.5 million jobs vanished in the worst monthly loss on record.

The figures are stark evidence of the damage coronavirus has done to a now-shattered economy.

The losses reflect what has become a severe recession caused by sudden business shutdowns in nearly every industry.

Nearly all the job growth achieved during the 11-year recovery from the Great Recession has now been lost in one month.

The collapse of the job market has occurred with stunning speed.

As recently as February, the unemployment rate was a five-decade low of 3.5%, and employers had added jobs for a record 113 months, while in March, the unemployment rate was just 4.4%

The government’s report on Friday noted that many people who lost jobs in April but did not look for another one were not even counted in the unemployment rate.

The impact of those losses was reflected in the drop in the proportion of working-age Americans who have jobs – just 51.3%, the lowest on record.

In addition to the millions of newly unemployed, 5.1 million others had their hours reduced in April.

That trend also means less income and less spending, perpetuating the economic downturn.

A measure of what is called underemployment – which counts the unemployed plus full-time workers who were reduced to part-time work – reached 22.8%, a record high.

Though some businesses are beginning to reopen in certain states, factories, hotels, restaurants, resorts, sporting venues, cinemas and many small businesses are still largely shuttered.

In the five weeks covered by the US jobs report for April, 26.5 million people applied for unemployment benefits.

The job losses reported on Friday were a smaller figure because the two are measured differently: the government calculates job losses by surveying businesses and households.

It is a net figure that also counts the hiring that some companies, such as Amazon and many grocery stores, have done.

By contrast, total jobless claims are a measure of just the layoff side of the equation.

For the United States, a key question is where the job market goes from here.

Applications for unemployment aid, while high, have declined for five straight weeks, a sign that the worst of the layoffs has passed.

Still, few economists expect a rapid turnaround.

The Congressional Budget Office has forecast that the unemployment rate will still be 9.5% by the end of next year.

A paper by economists at the San Francisco Federal Reserve estimates that under an optimistic scenario that assumes shutdowns are lifted quickly, the unemployment rate could fall back to about 4% by mid-2021.

But if shutdowns recur and hiring revives more slowly, the jobless rate could remain in double-digits until the end of 2021, the San Francisco Fed economists predict.