These 8 charts from Friday's job report show just how dire America's economic situation is now

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Carmen Reinicke,Andy KierszMay 9, 2020, 01:05 IST
These 8 charts from Friday's job report show just how dire America's economic situation is now

Associated Press

  • Friday's April nonfarm payroll report from the Labor Department was dismal — the US economy lost a record 20.5 million jobs, and the unemployment rate surged to 14.7%.
  • "The April employment report — if there was any lasting hope for a V-shaped recovery, this dashed it," Ryan Sweet, a senior economist at Moody's Analytics, told Business Insider.
  • Here are eight charts beyond the headline that show just how much of a hit the labor market has taken amid the coronavirus pandemic.
  • Visit Business Insider's homepage for more stories.

The April jobs report released by the Labor Department Friday paints a dismal picture of the US labor market, which has been devastated by sweeping shutdowns to curb the spread of coronavirus.

The Friday report showed that in one month, the US economy shed 20.5 million jobs, the most ever, and that unemployment skyrocketed to 14.7%. The report shows how quickly the coronavirus pandemic hit the labor market — just two months earlier, in February, the unemployment rate was 3.5%, a 50-year low.

In one month, the US economy has lost more jobs than the 8.7 million erased during the great recession. The unemployment rate has also jumped over the Great Recession peak of 10% in October 2009 seemingly overnight.

"The April employment report — if there was any lasting hope for a V-shaped recovery, this dashed it," Ryan Sweet, a senior economist at Moody's Analytics, told Business Insider.

What's perhaps most devastating about the April report is the extent to which it underestimates current economic pain. The unemployment rate doesn't take into account, for example, workers who have had their hours cut because of the coronavirus pandemic.

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In addition, it's likely that the labor market will continue to be hit hard in the coming months. Since the survey period, which ends in the middle of the month, millions more Americans have filed for unemployment insurance benefits as layoffs persist.

But beyond the headline numbers, the report has a wealth of data that paints a dire picture of the current US economic situation. Here are eight charts from the eye-popping report that show just how hard the US labor market has been hit by the coronavirus pandemic:

Read the original article on Business Insider
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Job losses were felt across every major sector. Employment in leisure and hospitality fell by nearly half between March and April as restaurants, hotels, and other entertainment venues have shuttered.

Job losses were felt across every major sector. Employment in leisure and hospitality fell by nearly half between March and April as restaurants, hotels, and other entertainment venues have shuttered.
Business Insider/Andy Kiersz, data from Bureau of Labor Statistics

It was largely expected that job losses would be seen across many sectors, with leisure and hospitality being the hardest hit.

The April report was "a good reminder of the extent of the negative impact of the policies put in place to contain COVID-19," Lindsey Piegza, chief economist at Stifel, told Business Insider.

Nearly every industry was impacted, from leisure and hospitality to manufacturing to government, Piegza said. "So it's really as if nobody was unaffected. No one escaped unscathed from this economy being shut down," she said.

There are now two waves of joblessness seen, according to Piegza. The first wave was reflective of the service sector, such as leisure and hospitality, food workers, and healthcare not on the front lines.

"The second wave that we've seen now is the impact on those we thought could efficiently work from home," she said.

Overall, 20.5 million jobs were lost across the US economy in April. This is about ten times the previous record monthly decline at the end of World War II in September 1945.

Overall, 20.5 million jobs were lost across the US economy in April. This is about ten times the previous record monthly decline at the end of World War II in September 1945.
Andy Kiersz / Business Insider

"It's heartbreaking – we went from one of the best job markets in the last 50 years to one of the worst in a matter of a couple months," Ryan Sweet, senior economist at Moody's Analytics, told Business Insider.

"I think it's going to get worse before it gets better," he said, but he doesn't expect that the US economy will lose another 20 million jobs in May. Instead, he expects that the unemployment rate will continue to rise, he said.

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The share of Americans in their prime working years with a job fell to its lowest level since December 1975.

The share of Americans in their prime working years with a job fell to its lowest level since December 1975.
Business Insider/Andy Kiersz, data from Bureau of Labor Statistics via FRED

This measures the share of people who actually have a job. Looking at the prime-age figure, as opposed to the total employment-to-population ratio, removes a significant headwind from the baby boomers as they retire.

"The drop in the prime age employment to population in April alone was more than twice as large as the drop we saw through the entire great recession," Nick Bunker, an economist at Indeed, told Business Insider.

He continued: "The drop in one month is twice as large as some as the drop that happened over 18 months."

Zooming out, the total employment-to-population ratio also slumped the most on record to an all-time low of 51.3%. While it is weighed down by older workers leaving the labor force, it could also be an important measure to watch as the recession unfolds.

During the Great Recession, this figure showed that baby boomers were staying in the labor market longer than anyone anticipated because of the economic downturn, according to Sweet of Moody's Analytics. It's likely this trend could repeat itself.

About 6.4 million Americans dropped out of the labor force in April, and are now neither working nor looking for a job.

About 6.4 million Americans dropped out of the labor force in April, and are now neither working nor looking for a job.
Business Insider/Andy Kiersz, data from Bureau of Labor Statistics

The labor force participation rate dropped 2.5% to 60.2%, the lowest since January 1973.

This may have been pulled lower by expanded unemployment benefits in the CARES Act, which no longer require workers filing for unemployment insurance to be actively seeking work. In addition, the health crisis has likely kept workers on the sidelines — many are not looking for work amid the pandemic.

Still, if workers remain on the sidelines going forward, it could be a very bad sign for any economic recovery.

"It is absolutely critical that the participation rate go back up in the next few months if the economy is to heal — if the workers who weren't looking for work last month still aren't looking for work a couple of months from now, that will be very bad news indeed," said Eric Winograd, senior economist at AllianceBernstein.

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Historically, unemployment for white workers has been lower than for non-white workers. While unemployment has spiked for white, black, and Latino or Hispanic workers alike, that racial gap still showed up in April.

Historically, unemployment for white workers has been lower than for non-white workers. While unemployment has spiked for white, black, and Latino or Hispanic workers alike, that racial gap still showed up in April.
Business Insider/Andy Kiersz, data from Bureau of Labor Statistics

The unemployment figures broken down by race and gender show that the economic impact of the coronavirus pandemic is not hitting all workers equally.

Friday's report showed that women are still facing the starkest losses, Kate Bahn, economist and director of labor market policy at Equitable Growth, told Business Insider.

Black and Hispanic unemployment rates — which were already higher than white unemployment pre-coronavirus — suffered sharp losses in the last two months.

The unemployment rate for black workers surged to 16.7% in April from 5.8% in February. In the same timeframe, Hispanic unemployment jumped to 18.9%, the highest of any group, from 4.4% in February.

The jump for Hispanic workers in particular is "probably based on occupational segregation, " Bahn said, as hispanic workers tend to be overrepresented in industries such as leisure and hospitality, which shed 7.7 million jobs in April.

"Literally half of the sector disappeared in a month," Bahn said. "It's just baffling to see the scale of that."

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Another alternative rate additionally includes workers with a part-time job who want a full-time job. That rate, often called underemployment, also hit a record high.

Another alternative rate additionally includes workers with a part-time job who want a full-time job. That rate, often called underemployment, also hit a record high.
Business Insider/Andy Kiersz, data from Bureau of Labor Statistics

The broadest measure of unemployment in the April jobs report showed that the labor market has been devastated beyond crippling layoffs.

The measure, called U-6, includes part-time workers who want a full-time job. The April report showed that upward of 5 million Americans fall into this category, a large margin of "shadow slack" in the workforce, Michael Feroli of JPMorgan wrote in a Friday note.

U-6 could also include those who have had hours cut back due to falling demand from coronavirus-induced shutdowns, meaning they are still working but not as much as they want.

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Unemployment, however, captures only people out of a job who are actively looking for work. A more expansive rate published by the BLS includes workers who want a job but have given up looking.

Unemployment, however, captures only people out of a job who are actively looking for work. A more expansive rate published by the BLS includes workers who want a job but have given up looking.
Business Insider/Andy Kiersz, data from BLS

Another measure of unemployment in the April report does include workers who have stopped actively seeking work.

This rate may have been higher due to the expanded unemployment benefits in the CARES Act, signed into law by President Donald Trump at the end of March. Workers recently laid off and collecting unemployment under the extended program do not need to be actively seeking work, meaning many have stopped looking for the time being.

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The headline unemployment rate hit 14.7%, the highest rate since the modern data set began in 1948.

The headline unemployment rate hit 14.7%, the highest rate since the modern data set began in 1948.
Business Insider/Andy Kiersz, data from Bureau of Labor Statistics

The rate is the highest ever recorded in the series. In addition, the 10.3 percentage-point increase from March unemployment rate of 4.4% is the largest one-month jump ever.

Still, the unemployment rate is likely an undercount of those out of work. For one, it doesn't count those who are no longer looking for work as unemployed, meaning many workers who have been laid off but aren't actively seeking jobs were not included.

The Bureau of Labor Statistics noted that those marked as employed but absent from work due to "other reasons" surged by 6 million this month.

If those workers had been classified as unemployed on temporary layoff, the unemployment rate would've been nearly five percentage points higher, according to BLS.

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