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Layoffs are spiraling.
The jobs cuts from American businesses and industries, like airlines and cruise lines, could add 5 million to 6 million people to the unemployment line in March, according to an estimate provided by Moody’s Analytics to Fortune. That would be greater than any single month for job losses in American history, and it blows away the more than 800,000 jobs lost in March 2009—the largest month for job losses during the 2007 to 2009 Great Recession. This comes as a growing number of states have ordered nonessential businesses to shut their doors in an attempt to slow the spread of the coronavirus.
“This is cataclysmic. I can’t think of a darker word. It’s Armageddon if lawmakers don’t come up with support [for businesses and households] in the next couple days,” says Mark Zandi, chief economist of Moody’s Analytics. His projected 5 million to 6 million job losses won’t be visible in the U.S. Bureau of Labor Statistics’ March jobs report—given it collects numbers only through the week of March 12. He expects the BLS March report to show only around 50,000 lost jobs, while the April report is when we’d see the millions of lost jobs on paper.
Over the next few months Zandi foresees the unemployment rate jumping from February’s 3.5% to the double digits. A double-digit monthly jobless rate has only occurred once over the past 30 years.
And this swell in unemployment claims is so large that some states, including Ohio on Monday, are seeing their unemployment sites crash. It’s easy to see why their sites are overwhelmed: Ohio saw a total of 139,468 jobless claims between March 15 to 19, compared to 4,815 the previous week.
These March job losses aren’t evenly disruptive. Businesses like hotels, restaurants, barber shops, and amusement parks are laying off employees in masses. Meanwhile, companies like Amazon and Walmart are going on hiring sprees to meet the demand from panic shoppers. Many professionals—for now—are being spared as employers simply ask them to work remotely.
“In many ways this could be a very deep and an unusual recession—the longer it goes on for, the more damage. Normally in a recession government takes action to stimulate demand, but right now they don’t want people traveling…the normal playbook doesn’t apply here,” says David Autor, a professor of economics at the Massachusetts Institute of Technology. He encourages the government to focus its resources to help households make ends meet.
If the economy does start to warm back up in the summer, Zandi could see unemployment falling back to 6% by the end of 2020, and then falling further in 2021 as the pent-up demand kicks the economy into gear.
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