WASHINGTON (AP) — With a startling 6.6 million people seeking jobless benefits last week, the United States has reached a grim landmark: More than one in 10 workers have lost their jobs in just the past three weeks to the coronavirus outbreak.
The figures collectively constitute the largest and fastest string of job losses in records dating to 1948. They paint a bleak picture of a job market that is quickly unraveling as businesses have shut down across the country. More than 20 million American may lose jobs this month.
The viral outbreak is believed to have erased nearly one-third of the economy’s output in the current quarter. Forty-eight states have closed non-essential businesses. Restaurants, hotels, department stores and countless small businesses have laid off millions as they struggle to pay bills at a time when their revenue has vanished.
All told, in the past three weeks, 16.8 million Americans have filed for unemployment aid. The surge of jobless claims has overwhelmed state unemployment offices around the country. And still more job cuts are expected. The unemployment rate could hit 15% when the April employment report is released in early May.
A nation of normally free-spending shoppers and travelers is mainly hunkered down at home, bringing entire gears of the economy to a near-halt. Non-grocery retail business plunged 97% in the last week of March compared with a year earlier, according to Morgan Stanley. The number of airline passengers screened by the Transportation Security Administration has plunged 95% from with a year ago. U.S. hotel revenue has tumbled 80%.
The government-mandated business shutdowns that are meant to defeat the virus have never brought the U.S. to such a sudden and violent standstill. For that reason, economists are struggling to assess the duration and severity of the damage.
“We’re just throwing out our textbooks,” said Beth Ann Bovino, chief U.S. economist at S&P Global Ratings.
The Penn Wharton Budget Model, created at the University of Pennsylvania’s business school, projects that the U.S. economy will shrink at an astonishing 30% annual rate in the April-June quarter — even including the government’s new $2.2 trillion relief measure, the largest federal aid package in history by far. An economic contraction of that scale would be the largest quarterly plunge since World War II.
A key aspect of the rescue package is a $350 billion small business loan program that is intended to forestall layoffs. Small companies can borrow enough to cover payroll and other costs for eight weeks. And the loans will be forgiven if small businesses keep or rehire their staffs. The Treasury Department has begun to roll out the loans to mixed results. Many small businesses have had trouble accessing loan applications, and many economists say the $350 billion is insufficient. Treasury Secretary Steven Mnuchin has said he will seek an additional $250 billion for the program from Congress.
The rescue package also added $600 a week in unemployment benefits, on top of what recipients receive from their states. This will enable many lower-income workers to manage their expenses and even increase their purchasing power and support the economy. It also makes many more people eligible for jobless aid, including the self-employed, contractors, and so-called “gig economy” workers such as Uber and Lyft drivers.
