You know it’s actually a lot worse than this, so don’t take any solace in thinking this is the bottom of the barrel:
Total nonfarm payroll employment fell by 701,000 in March, and the unemployment rate rose to 4.4 percent, the U.S. Bureau of Labor Statistics reported today. The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in
health care and social assistance, professional and business services, retail trade, and construction.
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In March, the unemployment rate increased by 0.9 percentage point to 4.4 percent. This is the largest over-the-month increase in the rate since January 1975, when the increase was also 0.9 percentage point. The number of unemployed persons rose by 1.4 million to 7.1 million in March. The sharp increases in these measures reflect the effects of the coronavirus and efforts to contain it.
You might be wondering: How do you square a figure of only 701,000 with reports that new unemployment claims are in the multimillions? The two statistics are clearly measured differently, which is why the very same report says in the second paragraph excerpted above that the number of unemployed people rose by 1.4 million – which is twice the number of reported jobs lost.
Part of it has to do with how the Bureau of Labor Statistics receives its information from employers, which might not be as fast as the information they get from states on unemployment claims. Expect that the report we get a month from now in April is horrific by degrees not even imagined.
Every month we tell you the new figures on job creation, and for the most part they’ve been excellent throughout the Trump presidency – usually well exceeding 200,000 a month. Here we just lost all the gains for at least three months, and no one seriously believes that’s the extent of what’s really happened.
The good news, I guess, is that the fundamentals of the economy should allow for many of these jobs to be re-established when the pandemic is over. The problem, though, is that there’s no telling how many of the employers who laid people off will be able to re-open. A restaurant owner who was already operating on tight margins can only keep the business in existence for so long in carryout-only or temporary-closure mode. He still has to pay rent, utilities and taxes, and he’s taking in little or no money.
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Not everyone is going to re-open. Some of these small businesses will be lost, and the jobs with them. But that should create opportunities for others with capital to invest to start new ventures, and eventually most of the people displaced by the virus should land somewhere. Even now, if you got laid off from your restaurant job, you can almost certainly find a job in a grocery store or doing delivery. There’s risk to it, but if you need a job, they are available.
The bigger problem for the economy at the moment is that productivity has cratered. The economy only creates wealth when it’s making things, and with the exception of companies deem “essential” for whatever reason, we’re not making things. People working from home can provide support for manufacturers, but you can only manufacture in a facility where people gather for that purpose. That’s not your living room with your laptop and your webcam broadcasting you on Zoom.
When we get back up and running, there should be pent-up demand for a lot of things, especially durable goods like cars, refrigerators and so forth. There had better be, because we need to make things to get this show back on the road, and producers are probably going to be nervous about whether people are ready to buy.
Hopefully they don’t spend all that stimulus money on puzzles and Netflix subscriptions, because when this is over, there are a lot of companies who need to make products and they need people to buy them. That’s what’s going to get our employment picture and our overall economic growth back to the very good places they were before that person ate the bat.