UPDATE: US sheds 701,000 jobs, ending a record-long hiring streak
A record-long streak of U.S. job growth ended suddenly in March after nearly a decade as employers cut 701,000 jobs because of the viral outbreak that’s all but shut down the U.S. economy.
The unemployment rate jumped to 4.4% from a 50-year low of 3.5%.
Last month’s actual job loss was likely even larger because the government surveyed employers before the heaviest layoffs hit in the past two week.
Nearly 10 million Americans applied for unemployment benefits in the last two weeks of March, far exceeding the figure for any corresponding period on record.
An earlier version of this report appears below.
After a record 113 straight months of hiring, the government’s monthly jobs report Friday is expected to show that the American jobs machine came to a sudden halt in March as a result of the coronavirus.
Economists have forecast that the government will say employers shed about 150,000 jobs and that the unemployment rate rose from a half-century low of 3.5% to 3.9%, according to FactSet. But the jobs figure will vastly understate the magnitude of last month’s losses because the government surveyed employers before the heaviest layoffs struck in the past two weeks. Nearly 10 million Americans have since applied for unemployment benefits, far more than for any corresponding period on record.
Still, some job cuts likely happened earlier in the month, when most economists think businesses began clamping down on hiring. The job loss for March will underscore the head-snapping speed with which the economy has unraveled after nearly a decade in which employers added nearly 23 million jobs. As recently as February, employers added 273,000 jobs.
Economists had welcomed February’s job gain, though they wondered why hourly paychecks weren’t rising more quickly. But any concerns over sluggish wage growth have now been put well off to the side.
"Four years of job gains have evaporated in the span of two weeks," said Daniel Zhao, an economist at the jobs website Glassdoor.
The layoffs will continue to mount. Some economists have forecast that 20 million jobs will be lost by the end of April, swelling the unemployment rate as high as 15% and wiping out the bulk of the past decade’s gains. That unemployment rate would be the worst since the 1930s.
Roughly 90% of the U.S. population is living under some version of a shutdown order, which has forced the closure of bars, restaurants, movie theaters, factories, gyms and most other businesses. Some hotels are closed; others are largely empty. Fast-food chains are either closed or providing only drive-through service, costing thousands of jobs.
With business activity tightly restricted, analysts expect a stomach-churning recession. Economists at Goldman Sachs have forecast that the economy will shrink at an annual rate of 34% in the April-June quarter — the worse fall on records dating to World War II. Goldman expects the economy to rebound with 19% growth in the third quarter. But even by the end of next year, the economy will not have fully recovered from the damage, Goldman projects.
Robert Kaplan, president of the Federal Reserve Bank of Dallas, said Thursday on CNBC that he expects the unemployment rate to rise to the mid-teens soon, before falling to about 8% by year’s end.
A key determinant of the economy’s future will be whether businesses can survive the shutdown and rehire many of the workers they laid off. If so, that would help the economy snap back and avoid the type of weak recovery that followed the past three downturns.
So far, some large and small businesses are still paying for health care benefits and keeping in touch with their newly laid-off workers. But if the virus outbreak forces businesses to stay closed into the late summer, many may go bankrupt or won’t have the money to rehire their old employees.
That would keep unemployment elevated, depriving potentially millions of people of a paycheck and slowing the recovery.