The latest jobs report on Friday shone a light on the economic damage of the coronavirus crisis.
U.S. nonfarm payrolls dropped by 701,000 jobs in March, according to the Labor Department. This comes after data released Thursday that showed a record-breaking 6.6 million new jobless claims last week.
Five experts weigh in on the economic fallout.
Bigger print to come
Kate Moore, head of thematic strategy for BlackRock’s Global Allocation investment team, said an even bigger print may be ahead in April.
“It’s fair to say that forecasting the economy right now is incredibly difficult, and it’s very fast moving. And some of the stuff that we’re going to be getting either from economic data or once we start getting into first-quarter earnings season, are going to be really backward looking. And we really need to be focused on the future when we’re thinking about investment opportunities right now. So, you know, this was obviously a bigger print than many people had expected. I think we’re going to have an even bigger print in April, we all know that’s going to happen. The bigger question is, what do companies do in order to shore up their balance sheets, shore up their businesses, to get through this crisis and end up in the second half of 2020 and the beginning part of 2021, in better and stronger shape?”
More support from Congress needed
Jason Furman, former chairman of the Council of Economic Advisers, said Congress will need to provide even further support for the country.
“We didn’t need this data. We can open our eyes and look at what’s going on around us. The unemployment rate right now is over 10%. The number of jobs lost is probably around 10 million or more. These data [points] are way out of date, because we’re in an economy where just every day and every week things are moving so quickly. I think it’s important that Congress really did a lot to help provide a bridge for a lot of these people. I think the unemployment insurance reforms are going to protect the purchasing power of a lot of the people losing their jobs. The question is, when and how will we be able to restart this economy? And, you know, can you put the pieces back together? And Congress is going to need to do even more to extend what they did, expand on what they did, provide relief for states. Making sure their protecting low-income households and improving the automatic stabilizers.”
Paycheck Protection Program
Michael Strain, director of economic policy studies at the American Enterprise Institute, said proper implementation of the Paycheck Protection Program is crucial.
“Arguably the most important thing that Congress did in its phase three legislation and the big $2 trillion bill, was provide a program that can ensure small business continuity. About half of all workers work for small businesses, and those are the businesses that are in these services sector job losses: restaurants, hotels, cafes, clothing stores, beauty salons, these sorts of things. And the key to bouncing back quickly, is to keep those workers attached to their job. So, the program, the Paycheck Protection Program that Congress put in place, essentially offers payroll grants to businesses. Congress said we will pay your payroll costs for two months if you keep your workers and don’t lay them off. And what we need right now is for that program to be implemented well. We need … the Treasury department, that’s actually in charge of implementing it and writing the regulations, to work well with the banking community and to figure out what the banks need in order to get that money flooding out the door and into the hands of small business so that we can avoid a 25% Great Depression level unemployment rate, if at all possible.”
Aim for a quick recovery
Jack Lew, a former Treasury Secretary, said the recovery from this pandemic will dictate the future of the economy.
“If you look at the jobs numbers, there should be no surprise that they’re showing an increase and if anything it understates the impact. It’s clear that when you shut the economy down… [millions] of people are applying for unemployment, out of work, looking for the future. The question I think is not to overreact to these numbers, which are pretty much what we expected, whether they’re a little above or below expectations, and to think about what are we doing to make sure that people have what they need while they’re unemployed or while they’re out of work and how do we make sure that the economy can be turned back on as quickly as possible. That recovery is going to be the thing that determines where the economy goes in the future. And I think that when you’re looking at a recession that’s caused by a public health crisis, everything is driven by the health issues. What we can do as a matter of policy is make sure that we maximize the chance, so we come out of this as quickly as possible.”
Strong growth in post-pandemic world
Jan Hatzius, chief economist at Goldman Sachs, said improvement and growth will come once circumstances relating to the coronavirus improve.
“We do think that in the second half we will see declines in unemployment; very, very sizable declines in unemployment. But from an extremely high level. So, we end the year in our forecasts at 9.5%. But obviously there’s a lot of uncertainty. I certainly agree that as the medical news improves, and as the economy reopens, we will see strong growth and also improvement in employment.”