The ADP report on job losses earlier in the week showed the largest cuts came in leisure and hospitality at 8.6 million workers, followed by trade, transportation and utilities at 3.4 million. But it also showed losses in construction (2.5 million) and manufacturing (1.6 million) that have likely accelerated in recent weeks.
The latest closely tracked gauge of manufacturing activity from the Institute for Supply Management fell to 41.5 in April, the lowest reading in 11 years and an indication the sector is shrinking severely. The sub-indexes were much worse than the headline reading — which got a boost from inventory numbers — with the employment gauge dropping to 27.1, down 16.3 points in a single month.
The oil and gas industry, which employs around 150,000 Americans directly but supports millions more jobs, according to the American Petroleum Institute, is cratering under low oil prices with a wave of bankruptcy filings just starting to get underway and the White House still scrambling over how to intervene.
Some environmentalists hail the cleaner air and the hits to the fossil fuel sector created by the coronavirus crisis. But even most liberals’ plans for a transition to cleaner energy sought to avoid wiping out current well-paid jobs without a plan for transitioning people to different kinds of work. None of those plans are in place.
And economists suggest that, as with retail, many of the oil and gas jobs will be vaporized — lengthening the time it will take to bring down overall unemployment.
“It will take until mid-decade before the economy is back to something considered full-employment — a 4 percent to 5 percent unemployment rate,” said Mark Zandi, chief economist at Moody’s Analytics.
While unemployment may fall quickly this summer as businesses reopen, Zandi said, it’ll be “a slog for the economy as we grapple with a potential second wave of infections. The economy won’t kick into any kind of gear until there is a widely distributed vaccine.”
Trump himself has mostly pivoted away from a focus on testing and treating the virus to one centered on what he has promised will be a “spectacular” and “tremendous” economic rebound. But some of his advisers offer more sober viewpoints.
“The jobs numbers are very, very chilling and I think that it’s very important, you know, to let people understand in a very somber way that this is the biggest shock that our economy has ever seen,”said senior Trump adviser and conservative economist Kevin Hassett on Fox Business Network this week.
But the messages from the administration are decidedly mixed. “We lost a lot of jobs all at once,” said Labor Secretary Eugene Scalia on Fox Business on Thursday. “But we’ll be gaining a lot of jobs all at once, too, as large companies reopen.”
Economists mostly agree that the jobs report should turn positive by June if reopenings go well. But they mostly disagree about a rapid snapback.
That will be hard to achieve if stores, restaurants and bars remain half-full and Americans fear returning to malls, theaters, big sporting events and air travel.
The Paycheck Protection Program has likely saved many small and midsize businesses, but many have already failed and millions are sputtering as the program runs short of funds and the smallest firms complain about inadequate access. The ADP report for April showed small businesses shed 6 million jobs in April. Many are of those are likely gone for good.
Airline, leisure and hospitality jobs could also be very slow to return. United Airlines this week warned that it would have to sharply reduce staffing in the coming months and that its management and administrative teams could be cut by 30 percent. Other carriers are expected to follow suit. Economists suggest it could be years before business and personal travel returns to levels seen before the crisis.
Economists also note that the coronavirus crisis has exposed structural problems with the U.S. economy that could take years to fix. “This has fallen disproportionately on workers with high school or less than high school education,” said Mary Daly, president of the Federal Reserve Bank of San Francisco, in an interview with POLITICO. “So when you think about coming out of this, it’s just another indication that we need to invest in human capital, we need to find ways to get people to have the skillset that allows them to work in jobs that are not so vulnerable to these types of shocks.”
That will not be a quick process. Fiscal support from Congress and easy money policies from the Federal Reserve will help. But even if people have some money in their pockets and can pay for rent and food, the economy cannot really reboot — and hiring can’t take off — without a stronger feeling of public safety.
“You could drop as much money on me as you want, but that doesn’t mean I’m going to go book a vacation and get on a plane,” said Greene.
For Trump and the White House, it means they may have to fight a reelection battle with numbers that may have bottomed out but not improved all that much. “The economic recovery will not be like a rocket ship, as the president likes to say,” said Zandi. “It will be more like a truck that got stuck in the mud — at least until there is a vaccine.”
Source: politico.com
See more here: news365.stream
