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Job Losses Stir Fears of Lasting Damage05/29 06:32
WASHINGTON (AP) -- The coronavirus crisis threw at least 2.1 million
Americans out of work last week despite the gradual reopening of businesses
around the country, stoking fears Thursday that the scourge is doing deep and
potentially long-lasting damage to the U.S. economy.
Despite a few glimmers of hope, most of the latest economic news from around
the globe was likewise grim, as some of the world's most populous countries
reported rising infections and deaths. The confirmed U.S. death toll has
surpassed 100,000, the highest in the world.
The latest job-loss figures from the U.S. Labor Department bring to 41
million the running total of Americans who have filed for unemployment benefits
since the coronavirus shutdowns took hold in mid-March.
There were some encouraging signs: The overall number of Americans currently
drawing jobless benefits dropped for the first time since the crisis began,
from 25 million to 21 million. And first-time applications for unemployment
benefits have fallen for eight straight weeks, as states gradually let stores,
restaurants and other businesses reopen and the auto industry starts up
factories again.
But the number of U.S. workers filing for unemployment benefits is still
extraordinarily high by historical standards, and that suggests businesses are
failing or permanently downsizing, not just laying off people until the crisis
can pass, economists warn.
"That is the kind of economic destruction you cannot quickly put back in the
bottle," said Adam Ozimek, chief economist at Upwork.
The U.S. unemployment rate was 14.7% in April, a level not seen since the
Depression, and many economists expect it will be near 20% in May.
On Wall Street, stocks that climbed for much of the day fell by the end of
trading over concerns about rising U.S.-China tensions. After a plunge in
February and much of March, the market has been recovering, most recently as
investors move into stocks that would benefit most from a reopening economy.
The unemployment figures come amid an intensifying debate in Congress over
whether to extend $600 in extra weekly federal unemployment benefits, provided
under rescue legislation passed in March but set to expire July 31.
Democrats have proposed extending the payments, while Republicans have
argued that the extra money could discourage laid-off workers from returning to
jobs that pay less than they are getting on unemployment.
Kelly Kelso, a 30-year-old roadie from Nashville, Tennessee, for the rock
group Foreigner, got her first unemployment check last week after more than
eight weeks of waiting. She said she is still receiving far less in benefits
than the $1,250 per week or more she made on tour.
Though Kelso is reluctant to leave the music industry, she said, "I have a
cosmetology license. If all else fails, I could go back to doing hair."
Another looming storm cloud: Economists say the sharp loss of tax revenue
for state and local governments is likely to compound the damage from the
shutdowns by forcing additional public-sector layoffs in the coming weeks.
Those layoffs have just recently started showing up in the weekly jobless
claims report. Washington state, for example, reported layoffs of government
employees.
Job cuts also are appearing far beyond the initially hit industries such as
restaurants and stores, a sign that the damage is spreading even as businesses
reopen. Washington state said it saw layoffs in insurance, and New York state
reported job cuts by information technology companies.
Economists say many of the jobs lost are never coming back, and double-digit
unemployment could persist through 2021.
And as discouraging as the numbers are, the real picture may be worse. The
government counts people as unemployed only if they're actually looking for a
job, and many Americans probably see no point in trying when so many businesses
are shut down.
Airlines and aircraft manufacturers are struggling after air travel
plummeted early in the outbreak. Boeing is cutting more than 12,000 U.S. jobs
through layoffs and buyouts, many expected to be in the Seattle area. European
budget airline Easyjet said it will cut up to a third of its 15,000 employees.
American Airlines plans to eliminate about 5,100 jobs.
Amtrak likewise announced it will lay off about 20% of its 18,000 workers
amid a collapse in train ridership.
A number of European countries have strong safety-net programs that are
underwriting the wages of millions of workers and keeping them on the payroll
instead of adding them to the ranks of the unemployed. But the economic damage
is mounting there, too.
Nissan is rolling back production in Spain in a move the government said
could lead to 3,000 direct job cuts and thousands more losses at the
automaker's suppliers. And French unemployment claims jumped 22% in April, with
843,000 more people seeking work.
Elsewhere around the world, India saw another record daily jump in
coronavirus cases. Russia reported a steady increase in its caseload, even as
Moscow and provinces across the vast country moved to ease restrictions in sync
with the Kremlin's political agenda.
And South Korea reported dozens of new cases, all in the densely populated
Seoul metro area, as officials scramble to stem transmissions linked to a
massive e-commerce warehouse and avoid losing some of the hard-won gains that
made it a model for the rest of the world.
Worldwide, the virus has infected more than 5.8 million people and killed
about 360,000, with the U.S. having the most confirmed cases and deaths,
according to a tally by Johns Hopkins University. Europe has recorded about
170,000 deaths.
The true dimensions of the disaster are widely believed to be significantly
greater, with experts saying many victims died without ever being tested.
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