Unemployment Rate Surges To 14.7%
The outbreak of COVID-19 and the subsequent shutting down of the U.S. economy has caused job losses at an unprecedented rate.
ADP released its April report last week, which showed private payrolls eliminated 20,236,000 jobs during the month. The total from last month is the highest since the monthly report began in 2002 and shattered the prior record of 834,665 in February 2009.
"Job losses of this scale are unprecedented," co-head of the ADP Research Institute Ahu Yildirmaz said. "The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession."
Last week's 3.17 million initial jobless claims brought the total over the prior seven weeks to an astonishing 33.5 million, according to the Labor Department. The number of jobs lost represents about 20% of the U.S. working age population.
On Friday, the Labor Department released its April nonfarm payrolls report which showed 20.5 million jobs were lost, causing the unemployment rate to jump to 14.7%. In the latest sign of how vast the damage has been to U.S. employment, both numbers shattered post-World War II era records.
The previous post-World War II era record unemployment rate was 10.8%. For context, the unemployment rate during the financial crisis peaked at 10% in October 2009. You have to go all the way back to the Great Depression peak unemployment rate of nearly 25% to find a higher unemployment rate than where it currently stands.
The "real" unemployment rate, which includes those not looking for employment and those holding part-time jobs for economic reasons, hit an all-time high of 22.8% last month. The previous record high for the "real" unemployment rate was 17.2% in April 2010. At the same time, the labor force participation rate fell to 60.7% last month, its lowest level since 1973.
The total employment level of 133.4 million Americans is now the lowest level since June 1999. The unemployment rate for females, latinos and African Americans all soared above 15% in April, while Asian American unemployment rate fell just shy at 14.5%.
The hardest hit industry was leisure and hospitality, which lost 7.7 million jobs, 5.5 million of which came from eating and drinking establishments. Other hard hit industries include education and health services, professional and business services, and retail. The unemployment rate for service occupations rose from 4% in March to more than 27% last month.
Treasury Secretary Steven Mnuchin believes the "real" unemployment rate could be closer to 25%, while White House adviser Kevin Hassett believes the unemployment rate could peak above 20% in the coming months. While these unemployment numbers are hard to digest, it's likely they get worse before they get better.
U.S. will buy agricultural products. U.S. President Donald Trump announced the government will purchase $3 billion worth of dairy, meat and produce from farmers and ranchers under a program called "Farmers to Family Food Box." President Trump tweeted "Starting early next week, at my order, the USA will be purchasing, from our Farmers, Ranchers & Specialty Crop Growers, 3 Billion Dollars worth of Dairy, Meat & Produce for Food Lines & Kitchens. “FARMERS TO FAMILY FOOD BOX” Great news for all!"
They don't trust the bounce? With markets continuing to rally from the March lows, investors pulled $16.2 billion from stocks last week, the largest outflow since March, according to Bank of America. For the first time this year, technology stocks saw a weekly outflow as investors redeemed $43 million worth. For the week, investors moved $11.3 billion into bonds and $53.5 billion into cash as Bank of America's internal indicator of sentiment hit "extreme bearish." Nine out of ten Bank of America clients believe the current rally is a bear market rally.
Elon isn't happy in California. Tesla co-founder and CEO Elon Musk said he is prepared to move Tesla's operations out of California, while also saying the company is preparing to file a lawsuit against Alameda County. Musk is unhappy that Alameda County officials haven't given Tesla the go-ahead to resume vehicle production at its Fremont plant. Musk tweeted "Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant 'Interim Health Officer' of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!"
Shanghai Disneyland reopens. Shanghai Disneyland, which has been closed since January 25, reopened today with tickets selling out within minutes. The park typically has 80,000 visitors per day but has been ordered to operate at 30% capacity, meaning about 24,000 visitors will be allowed per day. Disney CEO Bob Chapek said it will take several weeks for the theme park to operate at 30% capacity. Visitors will have to use the Shanghai Health QR code for contact tracing and wear face masks at all times except for while dining.
Lyft will require masks. Lyft will require both drivers and passengers to wear masks, as well as complete a health certification program stating they do not have any symptoms of the coronavirus. "A really important component of this policy is that it’s not just for drivers," Lyft head of global operations Angie Westbrock said. "This policy requires passengers to also certify that they’re going to comply with this health safety policy and that they’ll also wear a mask."