UPDATED: May 14, 9:15 a.m.
PHILADELPHIA (KYW Newsradio) — New U.S. Labor Department numbers came out Thursday morning, showing that about 3 million more workers laid off in the coronavirus pandemic applied for unemployment benefits last week. That makes for a total of nearly 36 million people added to the unemployment rolls in the last two months.
The viral outbreak has led more companies to close their doors and cut jobs, even as some states begin to reopen businesses. Wharton Business School economist Diane Lim, who predicted in March that the plummeting economy would rebound fairly quickly when reopening measures began, says she has changed her mind.
"I've become less optimistic about how fast the economy will bounce back," Lim said.
Lim, director of outreach and senior advisor at the Penn Wharton Budget Model, said the longer people are asked to stay at home, the greater the probability that jobs unable to be done remotely could be lost.
She added there will be changes as to how people conduct business.
"This could be an example of creative destruction that economists sometimes talk about, that kind of economic notion of survival of the fittest is that when you go through a really hard time, if you actually survive it, you're better," she said.
The hardest hit have been the restaurant and hospitality industries, followed by retailers, but Lim said there have been signs that a recovery is beginning.
"As states are reopening now, there will be a move from unemployment back to employment," she added.
But she said reopening can't be rushed, since spending correlates to feeling safe and secure.
"Any time that we get a new spike in cases, we're going to see everyone pull back from social activities and economic activity," she explained.
Unemployment slows, but remains enormous
The number of first-time applications has now declined for six straight weeks, suggesting that a dwindling number of companies are reducing their payrolls.
By historical standards, though, the latest tally shows that the number of weekly jobless claims remains enormous, reflecting an economy that is sinking into a severe downturn. Last week's pace of new applications for aid is still four times the record high that prevailed before the coronavirus struck hard in March.
Jobless workers in some states are still reporting difficulty applying for or receiving benefits. These include free-lance, gig and self-employed workers, who became newly eligible for jobless aid this year.
The states that are now easing lockdowns are doing so in varied ways. Ohio has permitted warehouses, most offices, factories, and construction companies to reopen, but restaurants and bars remain closed for indoor sit-down service.
A handful of states have gone further, including Georgia, which has opened barber shops, bowling alleys, tattoo parlors and gyms. South Carolina has reopened beach hotels, and Texas has reopened shopping malls.
Data from private firms suggest that some previously laid-off workers have started to return to small businesses in those states, though the number of applications for unemployment benefits remains high.
The latest jobless claims follow a devastating jobs report last week. The government said the unemployment rate soared to 14.7% in April, the highest rate since the Great Depression, and employers shed a stunning 20.5 million jobs. A decade's worth of job growth was wiped out in a single month.
Even those figures failed to capture the full scale of the damage. The government said many workers in April were counted as employed but absent from work but should have been counted as temporarily unemployed.
Millions of other laid-off workers didn't look for a new job in April, likely discouraged by their prospects in a mostly shuttered economy, and weren't included, either. If all those people had been counted as unemployed, the jobless rate would have reached nearly 24%.
Most economists have forecast that the official unemployment rate could hit 18% or higher in May before potentially declining by summer.
The job market's collapse has occurred with dizzying speed. As recently as February, the unemployment rate was 3.5%, a half-century low. Employers had added jobs for a record 9½ years. Even in March, unemployment was just 4.4%.
Now, with few Americans shopping, traveling, eating out or otherwise spending normally, economists are projecting that the gross domestic product — the broadest gauge of economic activity — is shrinking in the April-June quarter at a roughly 40% annual rate. That would be the deepest quarterly contraction on record.
Few analysts expect a quick rebound. Federal Reserve Chair Jerome Powell warned Wednesday that the virus-induced recession could turn into a prolonged downturn that would erode workers' skills and employment connections while bankrupting many small businesses.
Powell urged Congress and the White House to consider additional spending and tax measures to help small businesses and households avoid bankruptcy.
___
The Associated Press contributed to this report.
