11 May THE APRIL JOBS REPORT
The reality of the government induced shutdown is now upon us. The economy lost an unprecedented 20.5 million jobs in April and the unemployment rate more than tripled to 14.7%, the highest since the 1930s. In February the rate stood at 3.5%. The number of jobs lost shattered all records stemming from the late 1930s by a wide margin.
The Labor Department stated the unadjusted unemployment rate in April would have been almost 5 percentage points higher had workers been classified as unemployed on temporary layoff, rather than employed but absent from work due to other reasons. Furloughed workers accounted for about 4 out of 5 unemployed Americans.
April’s jobs loss erased all of the jobs the economy has added in over a decade.
In my view this is devastating. There is someone behind each of these numbers, reiterating Tom Hanks line in Saving Private Ryan; “Ryan better be worth it. He better go home and cure some disease or invent a longer lasting lightbulb.”
The data indicated average hourly earnings rose a massive 4.7% from the prior month and 7.9% from a year earlier as the data is skewed by the disproportionate loss of low wage workers. Leisure and hospitality employees were crushed as employment in restaurants and hotels declined by 7.65 million or almost half of total employment in the sector.
All industries were hit including the health care sector where jobs fell by a record 1.44 million as non Covid visits and elective procedures dried up or were prohibited by government edict.
The underemployment rate, which includes discourage workers and those working part time who want full hours rose to 22.8% from 8.7%.
The labor participation rate fell to 60.2%, the lowest since 1973.
Looking on the bright side of the data (if there is such a thing), the statistics were not as bad as projected.
To write the incredible obvious, tomorrow will be dictated by how quickly job growth returns.
We are living in unprecedented times. There are no benchmarks. The government has never shut down the economy, much less a shutdown for health issues.
The psychological damage is intense. All one has to do is look at the people at the supermarket who in my view are despondent at best. Those questioning the government shutdown via a simple cost benefit analysis are viewed as cold hearted, uneducated Neanderthals.
The opposite of hope is despair. By focusing on the negative instead of using some pragmatism or placing the data in some type of perspective, the odds of falling into the great pit of despair rises exponentially.
Focus on the positive. Put the data into perspective. And yes, Hope is a strategy. We will overcome this crisis just as we have everyone before and today too shall pass just.
What will happen this week?
Last night the foreign markets were mixed. London was down 0.15%, Paris down 1.23% and Frankfurt down 0.61%. China was down 0.02%Japan up 1.05% and Hang Sang up 1.53%.
The Dow should open moderately lower on economic uncertainty. The 10-year is off 2/32 to yield 0.69%.