Business Report: 30 Million Americans Lose Jobs During COVID-19 Shutdown
Q: After years of growth, a steep drop in GDP was reported this week. How does this factor into the damage done by the shutdowns related to COVID-19?
A: Really the economy dropped off a cliff in the last three weeks of March. A large part of this was driven by the intense decline in consumer spending on services. Consumer service spending is over 50% of overall GDP. So people not going to hair salons, not doing health care because they are concerned about going to their doctor, or legal services or anything like that severely impacted the spending.
Behavior around travel and leisure and going out to dinner will take some time to get back to a pace that it was a few months ago. So with that, we'll start building momentum in the third quarter. We won't really see big momentum until the fourth quarter assuming there is no second wave of COVID-19. Where we'll see a solid return to some economic growth will be in 2021.
Q: Millions more jobless claims were filed this week. What should we expect when the unemployment rate for April is announced?
A: To put it in perspective, during the entire great recession, we lost 8.7 million jobs. We gained and created 22 million jobs from the end of the great recession until now. With the loss of 30 million jobs, we're at a deficit of 16 million jobs going back all the way before the great recession. So that's a major statement.
50% of Americans say that somebody in their household either has lost a job or if they're hourly, has had significant cutbacks in the number of hours. So we anticipate that the unemployment rate when it will be announced next week in the jobs report might actually cross 15-percent.