Deprecated: Function create_function() is deprecated in /home/customer/www/old.tipponline.com/public_html/libraries/gantry/core/gantry.class.php on line 1043

Deprecated: implode(): Passing glue string after array is deprecated. Swap the parameters in /home/customer/www/old.tipponline.com/public_html/libraries/gantry/core/gantry.class.php on line 1044

Deprecated: Function create_function() is deprecated in /home/customer/www/old.tipponline.com/public_html/libraries/gantry/core/gantry.class.php on line 1043

Deprecated: implode(): Passing glue string after array is deprecated. Swap the parameters in /home/customer/www/old.tipponline.com/public_html/libraries/gantry/core/gantry.class.php on line 1044
Why The Real Unemployment Rate Is Much Higher Than 14.7%
Deprecated: Function create_function() is deprecated in /home/customer/www/old.tipponline.com/public_html/libraries/gantry/core/gantry.class.php on line 1043

Deprecated: implode(): Passing glue string after array is deprecated. Swap the parameters in /home/customer/www/old.tipponline.com/public_html/libraries/gantry/core/gantry.class.php on line 1044

The U.S. economy lost a record-shattering 20.5 million jobs last month as the unemployment rate soared to 14.7%. But even that understates the job carnage from the coronavirus shutdown of the economy in mid-March. The broadest measure of labor underutilization, which includes those with reduced hours, jumped from 8.7% to 22.8%. 

The number of people working part-time for economic reasons, not by choice, jumped to 10.7 million in April from 4.2 million in February.

The Labor Department says the real unemployment rate is likely 19.2%. That's because about 7.5 million workers should have been classified as "unemployed on temporary layoff," instead of employed but not at work.

The 19.2 million figure doesn't include those with reduced hours.

As it is, the ranks of people on temporary layoff have surged by 17.2 million in the past two months. The possible good news is that the number of permanent job losses is only up 700,000. The job destruction looks like the Great Depression, but the pace of the collapse was like nothing in U.S. history.

Barring a second wave of Covid-19 that's even worse than the first, the worst is likely behind for the U.S. economy. Most states are already partially reopening. Starbucks (SBUX) has reopened almost all stores, and Macy's (M) has reopened a portion. General Motors (GM) plans to reopen U.S. plants on May 18. A flurry of such announcements is underway.

Dow Jones Futures Reaction To Jobs Report

The Dow Jones has rebounded from the coronavirus stock market crash. April registered the best monthly gain since 1987.

After the jobs report, the Dow rose 1.3% in morning stock market action. The S&P 500 and Nasdaq composite rose 1.2%.

The jobs report headlines were slightly less-bad than the 21.5 million lost jobs and 16.4% unemployment rate that economists expected.

The 10-year Treasury yield initially rose, before easing back to 0.64%. The historically low Treasury yields reflect both the uncertain economic outlook and the massive efforts of the Federal Reserve to keep the economy going with ultralow interest rates, trillions in asset purchases and major new programs to lend money to businesses and buy municipal debt.

Jobs Report Details

Some of the worst-hit sectors included retail (-2.1 million jobs), construction (-975,000), manufacturing, (-1.3 million), and leisure and hospitality (-7.7 million).

The average hourly wage oddly rose $1.34 to $30.01. That reflects layoffs that were more focused on lower-paying jobs.

Job losses for March, reflecting the midmonth employment survey, were revised to a loss of 870,000 from the initially reported 701,000 decline.

Data from the employer survey shows that the number of payroll jobs has shrunk by 14% since February. But aggregate hours worked point to an even sharper 16.2% fall.

By far the biggest hit is in the leisure and hospitality sector, which has seen payroll jobs collapse by 48.3% and hours worked by 51.5%.

Most of the job losses could turn out to be temporary. But that will depend on how quickly Americans shake off coronavirus fears and return to something approaching normalcy. Even if most jobs return, the unemployment rate could remain elevated for months to come, if not longer.

The IBD/TIPP Economic Optimism Index released Tuesday showed a gain of 1.9 points to 49.7, just below the 50 neutral level.   

The $2 trillion coronavirus rescue package has surely helped. The legislation included a $600 boost to weekly unemployment benefits, $350 billion in emergency loans and grants for small business, and up to $1,200 per American adult and $500 per child, with eligibility based on income. Since then, Congress added another $250 billion to Paycheck Protection Program support for small business.

Meanwhile, a separate IBD/TIPP index of financial stress eased 5.8 points to 64.0, after hitting the highest level since December 2008 in April. Readings above 50 indicate more stress.

Please click here to read the original article on the Investor’s Business Daily website.

 

 

Submit to DeliciousSubmit to DiggSubmit to FacebookSubmit to Google PlusSubmit to StumbleuponSubmit to TechnoratiSubmit to TwitterSubmit to LinkedIn