The coronavirus pandemic is killing businesses and jobs faster than anything in living memory.
Layoffs have skyrocketed, nearly half of all U.S. companies expect to announce furloughs, and 37% have begun a hiring freeze as the virus reaches into every nook and cranny of commercial life.
Gap on Monday announced that it was shutting its doors across North America and Europe on April 1 and would furlough their workers. The company will halt wages but pay “applicable benefits” until stores reopen, it said.
Other prominent retailers announced massive layoffs in recent days. Macy’s and Kohl’s announced Monday that they furloughed staff and closed their doors.
They’re unlikely to open again until late spring or until the virus is checked. It has already infected more than 184,180 people in the United States and killed at least 3,720, according to Johns Hopkins University data. Deborah Birx, the White House coronavirus task force coordinator, said Tuesday that the expected peak of infection and death is still some two weeks away.
The White House recommended that everyone practice social distancing for another month, and stay home if possible. More and more states are issuing stay-at-home orders and extending them further into the future, meaning that all nonessential businesses will remain closed.
A gallon of regular gasoline is selling for less than $1 in some states, slaughtering jobs in the oil industry. Houston’s Halliburton Co. has furloughed 3,500 workers. More than a million jobs in the oilfield service sector could be cut this year as the coronavirus slashes projected sales, according to a report by Rystad Energy.
Job losses now underway far exceed anything the country has seen before.
More than 47 million people could be laid off, the Federal Reserve Bank of St. Louis estimated, and the unemployment rate could exceed 30%.
Such losses would far exceed the worst numbers of the 2008 financial crisis and eclipse those of the Great Depression.
Forecasters expect new jobless claims to be released Thursday by the Labor Department will be higher than the record 3.2 million reported last week.
Pictet Wealth Management projected that new claims could exceed 6 million for the week ending March 28, meaning 9 million people in total will have applied for unemployment insurance benefits in just the past two weeks. Other projections are not so dire; Goldman Sachs estimates job losses at 5.2 million, and Citigroup forecasts 4 million. The median projection is 3.5 million lost jobs, according to Bloomberg.
Rachel Greszler, a research fellow at the Heritage Foundation, expects the unemployment rate to at least double for March, from the historic low of 3.5% in February.
“Based on last week’s increase in claims [of 3.2 million], we’re probably about at 5.3% as of last week. If we see a similar jump this week, then we’ll be a little over 7% or 7.2%,” she told the Washington Examiner. “So, I would not be surprised if we are at least at 7% and potentially much higher, as high as 9%.”
The monthly unemployment rate has not been 7% or higher since October of 2013, according to the Labor Department.
Wells Fargo projects that the spread of the virus will increase the jobless rate to 3.8% for the first quarter and 7.3% in the second quarter. The unemployment rate then would drop below 7% through 2021.
The $2.3 trillion relief bill signed by President Trump last week includes many hundreds of billions of dollars in loans and grants designed to help businesses keep employees on their payrolls even as they face, in many cases, a total loss of income.
In recognition of the fact that millions will have lost jobs almost immediately, and indeed that officials want to see many workers staying at home rather than venturing to workplaces where they could spread the virus, the bill also contains aid to people who have been laid off or furloughed, meant to tide them over.
The bill provides an additional $600 a week on top of normal state unemployment benefits. It also provides tax rebates of $1,200 an adult.
