BREAKING NEWS: US unemployment rate hits 14.7% - the highest rate since the Great Depression - as more than 20.5 million people across the country suffer job losses amid COVID-19

The US economy lost a staggering 20.5 million jobs in April - the steepest plunge since the 1930s Great Depression and the starkest sign yet of how coronavirus is battering the world's biggest economy.

The Labor Department's closely watched monthly employment report released on Friday showed the unemployment rate spiked to 14.7 percent last month. 

The report indicated that the vast majority of April's job losses - roughly 90 percent - are considered temporary, a result of businesses that were forced to suddenly close but hope to reopen and recall their laid-off workers.  

The jump in the unemployment rate, however, didn't capture the full devastation wrought by the business shutdowns. 

The Labor Department said millions of Americans were classified as employed in April even though their employers have closed down. These people should have been classified as on temporary layoff and therefore unemployed. 

If they had been counted correctly, the unemployment rate would have been nearly 20 percent.   

It also doesn't include the millions who applied for jobless aid in the final week of April because the government collected data prior to those figures being released. 

The enormous magnitude of job cuts has plunged the US economy into the worst economic crisis since the Great Depression in the 1930s where the jobless rate reached 25 percent. 

Nearly all the job growth achieved during the 11-year recovery from the Great Recession has now been lost in just one month. 

The largest monthly job loss prior to April was about 2 million in September 1945 after WWII. In March 2009, at the height of the Great Recession, 800,000 jobs were lost.  

+4

The US economy lost a staggering 20.5 million jobs in April - the steepest plunge since the 1930s Great Depression and the starkest sign yet of how coronavirus is battering the world's biggest economy 

+4

The Labor Department's closely watched monthly employment report released on Friday showed the unemployment rate spiked to 14.7 percent last month

President Donald Trump reacted to the news, saying the rate was 'totally expected'. 

'It's totally expected, there's no surprise,' he told Fox & Friends just moments after the report was released.

'Even the Democrats aren't blaming me for that. What I can do is I can bring it back. Those jobs will all be back, and they'll be back very soon. And next year we'll have a phenomenal year.' 

The collapse of the job market has occurred with stunning speed. As recently as February, the unemployment rate was a five-decade low of 3.5 percent. In March, the unemployment rate was just 4.4 percent with 870,000 jobs lost. 

That March figure, however, did not account for the millions of jobs lost in the final two weeks of that month when the coronavirus pandemic forced states to go into lockdown. 

The latest 14.7 percent rate comes a day after the Labor Department's report into weekly unemployment benefit claims showed nearly 3.2 million laid-off workers applied for aid in the week ending May 2. 

At least 33.5 million people have now filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors, bringing the US economy to a near standstill. 

The latest weekly claims data had no impact on the government's April jobs report because it falls outside the period during which the government surveyed establishments and households for its monthly report.  

Statista Privacy Policy

The bleak numbers strengthen analysts' expectations of a slow recovery from the recession caused by the pandemic, adding to a pile of dismal data on consumer spending, business investment, trade, productivity and the housing market. 

The unemployment report underscores the devastation unleashed by lockdowns imposed by states in mid-March to slow the spread of COVID-19.

The government's report noted that many people who lost jobs in April but didn't look for another one weren't even counted in the unemployment rate. Their exit helped drive down the proportion of working-age Americans who were employed in April: It's now just 51.3 percent, the lowest proportion on record.   

In addition to the millions of newly unemployed, 5.1 million others had their hours reduced in April, according to the report. That trend, too, means less income and less spending, perpetuating the economic downturn. 

A measure of what's called underemployment - which counts the unemployed plus full-time workers who were reduced to part-time work - reached a record high of 22.8 percent. 

The wave of layoffs beginning in mid-March and continuing last month has widened some of the disparities in the US labor force. 

Blacks and whites each saw a rise of about 10 percentage points in the unemployment rate but the unemployment rate among Latinos jumped nearly 13 percent, possibly reflecting the steep job losses in the hospitality industry. 

The unemployment rate at least tripled for every major education category. But that still left the rate for those with college degrees in the single digits, at 8.4 percent. By contrast, more than 21 percent of those without a high school degree were jobless. 

Men and women had about equal unemployment rates going into the pandemic. The initial rounds of layoffs hit women slightly harder, possibly reflecting the deeper hit in the service industries. 

+4

There were 3.2 million new claims for unemployment benefits filed in the week ending May 2, according to a Labor Department report released on Thursday

+4

At least 33.5 million people have now filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors, bringing the US economy to a near standstill

For the United States, a key question is where the job market goes from here. Applications for unemployment aid, while high, have declined for five straight weeks, a sign that the worst of the layoffs has passed. Still, few economists expect a rapid turnaround.

A paper by economists at the San Francisco Federal Reserve estimates that under an optimistic scenario that assumes shutdowns are lifted quickly, the unemployment rate could fall back to about 4% by mid-2021.

But if shutdowns recur and hiring revives more slowly, the jobless rate could remain in double-digits until the end of 2021, the San Francisco Fed economists predict. 

Raj Chetty, a Harvard economist, is tracking real-time data on the economy, including consumer spending, small business hiring and job postings. 

Chetty noted the economy's health will hinge on when the viral outbreak has subsided enough that most Americans will feel comfortable returning to restaurants, bars, movie theaters and shops.

The data suggests that many small businesses are holding on in hopes that spending and the economy will rebound soon, he said. Small business payrolls have fallen sharply but have leveled off in recent weeks. Job postings haven't dropped nearly as much as total jobs have but it's unclear how much longer those trends will persist.

'There´s only so long you can hold out,' Chetty said.