Happy Friday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL — US unemployment rate soars to 14.7 percent as economy loses 20.5 million jobs: The U.S. lost 20.5 million jobs in April amid the economic devastation of the coronavirus pandemic as the steepest recorded surge in American unemployment nearly wiped out a decade of job gains, according to data released Friday by the Bureau of Labor Statistics (BLS).
The unemployment rate spiked from 4.4 percent in March, according to the April jobs report, as thousands of businesses closed and laid off or furloughed workers they could no longer afford to employ.
- The one-month rise in the unemployment rate between March and April is the largest ever recorded by the BLS.
- April’s staggering job losses also shattered records for both the largest one-month decline in jobs — roughly 2 million in September 1945 — and the highest level of unemployment ever recorded by the BLS, 10.8 percent in November 1982.
- The jobs lost in April alone are almost 2.5 times the 8.7 million jobs lost during the Great Recession, and nearly equal to the 22.4 million jobs gained in the decade of recovery that followed.
Between March’s revised loss of 870,000 jobs and April’s record-breaking plunge, the U.S. has lost roughly 21.4 million jobs since the spread of COVID-19 upended American life and derailed a resilient economy. I’ll walk you through the worst jobs report in modern American history here.
A small glimmer of hope meets a harsh reality: While 18.1 million of the 20.5 million jobs lost in April were due to temporary layoffs, according to the BLS, the steep economic toll of the pandemic may force many of those employers to close for good.
“Unfortunately, for many of those in the job market, the question becomes whether these jobs will return and these businesses reopen, which could have devastating and far-reaching economic effects,” Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, wrote in a Thursday research note.
Widespread job losses:
- The leisure and hospitality sector took the brunt of April’s damage, losing 7.7 million jobs as employment in the industry dropped 47 percent. A 5.5 million decline in restaurant and bar jobs also made up much of the April plunge.
- The pandemic wiped out 2.5 million education and health services jobs in April, including 503,000 losses in dental offices, 243,000 losses in physicians’ offices and 651,000 social assistance jobs.
- Government employment also sunk by 980,000 jobs, including the loss of 801,000 jobs in local government that reflects widespread school closures. The sharp decline in government jobs come as states and municipalities face severe budget shortfalls driven by rising unemployment claims and falling tax revenue.
- While the U.S. lost 2.1 million retail jobs in April, warehouse clubs and supercenters gained 93,000 workers. Professional and business services (2.1 million), manufacturing (1.3 million) and other services (1.3 million) also suffered seven-figure job losses.
LEADING THE DAY
White House adviser says new COVID stimulus talks on pause: White House economic adviser Larry Kudlow signaled Friday that formal negotiations on the next coronavirus stimulus package would be paused until early June.
“We’re in a lot of conversations right now. We’ve kind of paused as far as formal negotiations go,” Kudlow told reporters at the White House. “Let’s have a look at what the latest round produces. You need a month or so to evaluate that.”
Kudlow also noted that he and White House economic adviser Kevin Hassett continue to hold discussions with lawmakers, including a phone call Thursday with about 50 bipartisan members of the House.
Step back vs. push ahead:
- Kudlow emphasized that it was important to evaluate the impact of the last round of stimulus and the effect of states’ loosening coronavirus restrictions before enacting legislation providing further relief.
- President Trump also told reporters later Friday that the administration was not in a rush to reach a deal on a new measure to stem the economic fallout of the pandemic.
- But Democrats are pushing ahead with another $2-trillion proposal with New Deal aspirations as the country continues to suffer from the economic damage of the pandemic.
A trio of senators are also introducing legislation to provide $2,000 in monthly payments during, and in the immediate aftermath of, the coronavirus pandemic.
But Republicans have shown resistance to even one more round of stimulus checks.
- “Well people in hell want ice water, too,” said Sen. John Kennedy (R-La.) when asked about another round of checks. “I mean, everybody has an idea and a bill, usually to spend more money. It’s like a Labor Day mattress sale around here.”
- “I wasn’t a real big supporter of that in the first round,” said Sen. Ron Johnson (R-Wis.). “This isn’t your classic recession.”
- “The real stimulus that’s going to change the trajectory that we’re on is going to be the economy, not government checks,” said Sen. Lindsey Graham (R-S.C.). “So I doubt there will be another payment.”
The Hill’s Jordain Carney tells us why here.
Tech firms emerge as big winners in new COVID-19 economy: Tech stocks are defying gravity in the midst of what may be the worst economic downturn in a century.
On Thursday, the tech-heavy Nasdaq composite turned positive for the year after plunging more than 20 percent at one point in March from a record high a month earlier, even as indexes such as the Dow Jones Industrial Average remained down about 15 percent from 2019.
To some extent, the relative strength of tech stocks is the result of people increasingly turning to technology during a time of social isolation. But analysts say it’s also a sign of what’s to come as COVID-19 reshapes the economy.
“Investors now are looking forward to those kinds of business models and companies that will not only survive this environment, but thrive as a result of it,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman.
The Hill’s Niv Elis explains why here.
GOOD TO KNOW
- Communities reliant on the oil and gas industry say it may take years, not months, to bounce back from the coronavirus pandemic that’s ravaging local economies.
- The U.S. budget deficit has soared to $1.48 trillion for the first seven months of the current fiscal year, according to a new estimate from the Congressional Budget Office (CBO).
- A bipartisan group of lawmakers is urging the Trump administration to take action to prevent additional payments of coronavirus relief checks to dead people.
- The IRS said Friday that people should use the agency’s “Get My Payment” web tool by noon on Wednesday, May 13, in order to receive their coronavirus relief payment more promptly.
- A majority of U.S. Olympic sports organizations have applied for federal loans through the Paycheck Protection Program (PPP) due to financial strains caused by the coronavirus outbreak, according to a new report.
- Democratic Reps. Maxine Waters (Calif.), Denny Heck (Wash.) and Sen. Sherrod Brown (Ohio) on Friday proposed a $100-billion rental assistance program to help stave off evictions amid the economic downturn.
ODDS AND ENDS
- Google said Friday it has asked its workers to take off on May 22 in an attempt to address burnout from the coronavirus pandemic.
- The Senate Appropriations Committee is likely to skip two of the most controversial annual funding bills, signaling it will save those fights for a larger spending deal or floor votes.