Government Lending

Unemployment rate at 14.7% shatters record

It’s the highest jobless rate since the Great Depression in the 1930s

The U.S. unemployment rate spiked to a record high of 14.7% in April, more than tripling from March, after states trying to stem the spread of the COVID-19 pandemic shuttered businesses.

April’s rate shattered the former record set 37 years ago, in a data series that goes back to 1948, the Labor Department said on Friday. It’s the highest jobless rate since the Great Depression of the 1930s, economists said.

Almost every part of the economy was impacted by COVID-19 layoffs, according to the report. Leisure and hospitality businesses cut 7.65 million workers, retailers fired 2.1 million people, and health care lost 1.44 million positions as non-emergency visits to health care facilities plummeted.

Even with extreme measures to stop the spread of COVID-19 and avoid overwhelming hospital ICUs, the pandemic’s death toll passed 75,000 on Thursday, according to Johns Hopkins University. That’s a fraction of what public health experts projected would happen if no measures had been taken.

Amid all the misery, economists pointed to one number they said signaled the potential for a quick recovery: 18 million of the 20.6 million workers who lost jobs during the month said they were on temporary layoff.

“Over the last 50 years, the three recessions with the highest share of temporary layoffs were followed by the fastest labor market recoveries,” a group of Goldman Sachs economists led by Chief Economist Jan Hatzius said in a report.

The steepest labor downturn in more than 80 years is likely to increase pressure on Congress to pass a second major rescue package, on a scale matching the $2.2 trillion CARES Act enacted at the end of March.

Some of the measures being discussed in Washington D.C. included extending the beefed-up jobless benefits that were part of the first bill. Congress added $600 a week to unemployment insurance payments that are administered by the states in an attempt to bring the benefits closer to salary replacement.

The payments, which lapse in July, were aimed at keeping Americans current on their mortgages and other bills after being cut from payrolls because of a pandemic beyond their control.

Some Republican members of Congress, including Sen. Lindsey Graham (R-SC) and Sen.Tim Scott (R-SC), already have voiced opposition to extending the cut-off date.

“I promise you over our dead bodies will this get reauthorized,” Graham said last week, referring to his and Scott’s opposition to an extension.

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