Forecasters expect an unemployment rate of about 20% for May in the jobs report to be released by the Labor Department on Friday.
That level of joblessness has not been seen since the 24.9% unemployment rate during the Great Depression of the 1930s.
“When that number comes out, it’ll be ugly,” said Gordon Gray, director of fiscal policy at the right-leaning American Action Forum.
Economists expect the unemployment rate for last month to fall between 19% and 21%.
Gray also cautioned against deeming it “good news” if the rate happens to fall below 20%. “About a fifth of working Americans will be out of work; that’s a powerful statement as it could be. I would not be that interested in discussions on Friday that say ‘well, it came in at 19.5% instead of 20% so that’s good,’” he said.
Economists also expect jobs labor report to show that roughly 8 million workers lost their jobs in May.
If there is a bright spot in Friday’s labor report, it could be that it represents the worst of the labor market fallout, as the high number of jobless claims, a leading indicator, peaked in May, said Mark Hamrick, a senior economic analyst for Bankrate.
“I think it’s reasonable to assume that the May unemployment rate will be the peak,” he said.
Hamrick said the report that the Labor Department will release on Friday will not be good but “less worse” than the April jobs report that showed over 20 million jobs were lost that month. He stressed that the current job market is bad.
“We’re talking about a situation that is historically bad in magnitude and that we’re getting data that, you might say, is less worse,” he said. “I think it’s important to keep things in prospective that we’re still in the midst of a catastrophic economic downturn.”
The monthly jobs report details the employment situation for a given month, including changes in the number of people on payroll and the percentage of jobless workers.
The weekly jobless claims reports are another way to illustrate the employment landscape. And while the number of workers seeking aid each week remains historically high, it has dropped considerably from the nearly 7 million claims that were filed the week ending on March 28. The number of new workers who applied for unemployment benefits last week was nearly 1.9 million, the Labor Department reported Thursday, following 2.1 million job losses the week prior.
Still, ‘less worse’ does not equate to ‘good’ or even ‘short-lived.’ Bankrate’s recent survey found that 1 in 8 economists said the U.S. economy has entered its first depression since the 1930s and that a double-digit unemployment rate will persist into 2021.
Hamrick said the unemployment rate could be 10% in May of 2021, a level half the size of what is expected to be announced tomorrow, but also the height of unemployment during the Great Recession of 2007 and 2009.
“It’s quite remarkable that we’re looking a year down the road and saying the expectation is that we’ll get to a level that was the peak during the financial crisis. It really does tell us that this isn’t a short event as we had hoped,” he said.
Making matters worse, the unemployment rate that will be announced on Friday will likely understate the number of jobs lost last month.
The Labor Department ends its survey in the middle of the month, which means the true unemployment number for May is likely higher than will be reflected in Friday’s report, as millions of people lost jobs later in the month, as suggested by the weekly jobless claims.
Nor will the workers who are receiving unemployment benefits through the Pandemic Unemployment Assistance program, enacted by Congress in March to provide aid to unemployed workers who otherwise don’t qualify for regular benefits, necessarily be included in Friday’s jobless count, according to Daniel Zhao, a senior economist and data scientist at Glassdoor, a company that allows current and former employees to anonymously review companies.
“If somebody is receiving special pandemic assistance, they can be counted as unemployed, but it’s not a guarantee,” he said, adding that “it is likely that the report that will come out tomorrow will understate the actual scale of the crisis.”
Job postings on Glassdoor have dropped 30% since March, the month when most states issued stay-at-home orders. But Zhao thinks postings will increase as states start to reopen.
“Job openings have seemed to stabilize within the last few weeks and are very close, in my opinion, to bottoming out. … It is possible that we will start to see job openings rebound at a national level in the coming weeks,” he said.
Despite an expected uptick in job postings, Zhao said that the road to full, economic recovery will be a long one.
“The fact of the matter is that when you have a deep economic crisis, regardless of the cause, it takes time to recover back to pre-crisis levels,” he said. “The economy can’t turn on a dime.”
