The widespread damage to the US economy is becoming evident amid the standstill forced by the coronavirus pandemic, and data Thursday will reveal more of what
are expected to be massive job losses.
Bustling cities have been turned into ghost towns, as COVID-19 restrictions have forced shops, restaurants and offices to close, leaving grocery stores and hospitals the lone epicenters of activity.
Some economists are predicting the worst job losses since World War II.
But it will be much worse in April, economists warn, with job losses projected to surge to a previously unimaginable range of 10 to 20 million -- a shocking figure in what was billed as a solid economy.
A real-time view of the damage will be available when the Labor Department on Thursday provides weekly figures on first-time claims for unemployment benefits for the week ended March 28, after most businesses were obliged to shut down.
Last week's report showed a record 3.3 million workers filed for jobless benefits in the week ended March 21, the most ever recorded. The consensus among economists this week is for another blockbuster of 2.8 million, although Briefing.com is predicting a record 4.2 million.
Meanwhile the official employment report for March is due out Friday, but that is unlikely to show the full extent of the job losses because of the nature of how that report is compiled.
- The damage mounts -
Like the government jobs report, Wednesday's ADP National Employment Report looks at payroll data in the week including the 12th day of the month -- which in March was before the most stringent lockdowns took effect.
As a result, the March data "does not reflect the full impact of COVID-19 on the overall employment situation," ADP cautioned.
Ian Shepherdson of Pantheon Macroeconomics dismissed the ADP report as "irrelevant."
"These numbers don't matter; they capture only the leading edge of the virus hit. The pain is coming in April, when payrolls are likely to drop by perhaps 10 million-plus," he said in an analysis.
"The labor market was in good shape before the virus, but we knew that anyway, and it's irrelevant in the face of the impending discontinuity in the data."
- Small businesses suffering -
The ADP report showed total private employment fell by 27,000 in March, the biggest drop since September 2017.
Small businesses suffered the largest setback, as jobs plunged by 90,000, with the smallest firms employing less than 20 employees taking the biggest hit, the report said.
Shepherdson and other economists caution that the closely-watched official jobs report Friday also will dramatically underestimate the damage to the economy from coronavirus.
Gregory Daco of Oxford Economics has a dire prediction of 20 million jobs lost in April.
"The sudden economic stop triggered by the coronavirus crisis has given rise to an unprecedented wave of layoffs," he said in his analysis.
"Given the extreme nature of the shock, we anticipate the US will experience the sharpest job losses and highest rise in unemployment since World War II."
The government has thrown a lifeline to small and medium businesses to try to stem the damage. Starting Friday, they will have recourse to an unprecedented support program that will provide $349 billion in loans that will not have to be repaid if they are used mostly to pay workers.
The paycheck protection program allows companies with less than 500 employees to receive loans of up to $10 million if they rehire and retain their workers and use three-fourths of the money on payrolls.
The government has cut out the red tape usually associated with such loans, and will forgive the full amount if companies pay workers and use no more than 25 percent towards rent, mortgage and utility bills.
That program is part of the $2.2 trillion rescue package President Donald Trump signed into law last week that also has bailouts for the airlines and a massive expansion of unemployment benefits.afp