Job growth in the United States has stalled, especially in areas of the country where coronavirus infections are raging, according to experts.
“There will be more job losses,” said Michael Farren, a research fellow at the Mercatus Center at George Mason University.
Farren projected that these losses will mostly occur in pandemic hot spots, such as Florida or California, where infections are widespread.
“We’ve seemed to have shifted into more of a rolling, regional wave [of unemployment] as the virus goes around the country,” he said, adding that “I would certainly expect continued job losses, and they will continue to be a regional story.”
Florida and California are among states that have already bled thousands of jobs, with jobless claims of over 65,000 and 20,000, respectively, just for the week ending July 11, unusually high levels of layoffs that suggest net declines in employment. And there are economic indicators that show these areas of the country might continue to suffer job losses.
Google’s Community Mobility Report from Sunday shows that foot traffic to places such as restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters is down 17% overall from January and early February before the pandemic hit the U.S.
In virus hot spots, the decreases are larger. In Florida, which has over 385,000 cases, foot traffic is off by 26% when compared to January and early February. California, with over 425,000 cases, has 32% less foot traffic to these destinations.
If these trends continue and economic activity weakens further, employers will likely be forced to lay off workers, which would drive the number of unemployed higher. In fact, the “labor market recovery is stalling due to the worsening virus situation,” according to a Friday Goldman Sachs report.
“That is a very scary situation,” Farren said because the job loss could be permanent instead of temporary.
“The reason why the economy was able to bounce back so quickly [earlier this year] is that most of the job losses were temporary,” he said.
As the economy started to reopen from being shutdown to slow the spread of the virus, the nation gained 4.8 million jobs in June and 2.7 million jobs in May. Now, with infections rising again, economist Douglas Holtz-Eakin doesn’t see a repeat of that job creation happening soon.
“We’ve created a lot of jobs in the last two months. We probably won’t create as many as in those months, especially given the surge [of the virus] in the South and West,” he said.
Holtz-Eakin, who is president of the center-right economic think tank American Action Forum and a former director of the nonpartisan Congressional Budget Office, pointed out there already is evidence that job losses are on the rise.
The number of new jobless claims last week was 1.4 million, the Labor Department reported Thursday, which is higher than the prior week’s claims of 1.3 million.
Thursday’s report marked the first weekly increase in jobless claims since the end of March, when new applications peaked at 6.9 million, a troubling sign of danger for the economic recovery and job creation.
Holtz-Eakin regarded the labor report to be “not good news” when it comes to job creation.
The uptick in jobless claims comes as some states have reversed reopening plans for their economies. California and Florida are among them.
Farren projects job losses will continue to rise until the virus is controlled.
“The real solution for the economy won’t come until we actually have a solution to the disease itself,” he said.
